USD

The RBNZ cut their official cash rate Wednesday from 5.5% to 5.25% in what was the first “cut” in over 4 years. Some say a shock move but we were not surprised as the central bank pivots off existing tightening policy. More cuts are predicted over the coming months, the next meetings in 2024 are October 9 and November 27.The RBNZ citing recent progress in nearly meeting the banks inflation target of 1-3% (currently 3.3%) and weak domestic growth. Orr saying they are heading into a period of low and stable inflation. The release weighed heavily on the New Zealand Dollar (NZD) dropping 3 quarters of a percent into the evening against the US Dollar (USD) and has extended declines heading into Friday trading.

The current interbank midrate is:               NZDUSD 0.5980

The interbank range this week has been:            NZDUSD 0.5973- 0.6082

The New Zealand (NZD) has underperformed this week against the Australian Dollar (AUD) falling from Wednesday’s RBNZ rate release from 0.9160 (1.0915) to 0.9060 (1.1040) into Friday. The RBNZ was picked to raise interest rates in May but held, then in July the central bank started to change direction and rhetoric to cutting rates. The August 14 cut from 5.5% to 5.25% was on our radar but not so much on the wider market opinion as to what was predicted hence the NZD sell off. Aussie unemployment improved the AUD yesterday with the change in employed people rising 58,000 a surprise release after only 20,000 was expected. The Unemployment rate came in slightly higher at 4.2% over 4.1% in line with RBA projections and signalling no shift to easing policy any time soon. Overall, the AUD still has an edge, we believe we will be back in the 80’s over the coming couple of weeks.

The current interbank midrate is: NZDAUD 0.9044 AUDNZD 1.1053

The interbank range this week has been: NZDAUD 0.9046- 0.9174 AUDNZD 1.0900- 1.1054

The New Zealand Dollar (NZD) retreated Monday off the 0.5960 open against the US Dollar (USD) to post 0.5850 before reversing hard back to 0.5970. US Equity markets were to blame opening the week in the red, most falling over 2.5% taking all risk along for the ride. NZ Employment data came in hot Wednesday with a rise of 0.4% in the June quarter after -0.2% was predicted. The unemployment rate also rose to 4.6% from 4.4% after 4.7% was expected. It seems the slightly stronger than expected data fuelled the kiwi towards 0.6000 before NZ inflation expectations halted topside moves. The two-year forecast fell from 2.33% to 2.03% which could have a detrimental effect on the NZD pushing higher. Trading into Friday the cross is at 0.6012. Next week’s RBNZ cash rate should be interesting with markets split as to whether the central bank will cut rates from 5.50%.

The current interbank midrate is: NZDUSD 0.6005

The interbank range this week has been: NZDUSD 0.5848- 0.6023

The New Zealand Dollar (NZD) sank to 0.4600 (2.1745) Monday against the British Pound (GBP) before bouncing back briefly to push past the weekly open at 0.4660 (2.1470) to 0.4670 (2.1410) midweek. NZ Unemployment rose from 4.4% to 4.76% in June slightly down on predictions of 4.7% boosting the kiwi to 0.4725 (2.1160) NZ Inflation expectations put a cap on further NZD rises after the 2-year forecast was pegged back from 2.33% to 2.03%. We shall see next Wednesday if the RBNZ cut rates as markets are predicting or leave unchanged at 5.5%. We expect a cut based on recent poor business activity and incoming data. Also of note Wednesday is UK CPI y/y expected to rise from 2.0%.

The current interbank midrate is: NZDGBP 0.4712 GBPNZD 2.1222

The interbank range this week has been: NZDGBP 0.4598- 0.4740 GBPNZD 2.1096- 2.1747

It’s been all go in the New Zealand Dollar (NZD), Australian Dollar (AUD) cross this week with volatility abundant. The Aussie fell Monday posting 0.9215 (1.0850) before bouncing back to 0.9090 (1.1000) Tuesday around the RBA cash rate release. The central bank deciding it not time just yet to cut rates, Governor Lowe more hawkish than markets were expected, the RBA now expects inflation to stay above 3.0% for most of 2024 before dropping to their 2.5% target in 2026. NZ Employment data published above expectations Wednesday at 0.4% for the last quarter with the unemployment rate coming in at 4.6% vs 4.7% in June, higher than May’s 4.3% sending the kiwi back to 0.9115 (1.0970). We think prospects for the medium term In the cross look to be in the 80’s.

The current interbank midrate is: NZDAUD 0.9118 AUDNZD 1.0961

The interbank range this week has been: NZDAUD 0.9085- 0.9222 AUDNZD 1.0843- 1.1006

The New Zealand Dollar (NZD) has outperformed most main board currencies this week including the Australian Dollar (AUD) the kiwi reversing 4 weeks of declines from 0.8970 (1.1150) to clock 0.9130 (1.0950) this morning. The AUD has been under stress from talk of the RBA cutting possibly in November and poor Chinese manufacturing data. Australian CPI came in at 3.8% bang on expectation y/y in June up from May’s 4.0% y/y. Next week’s RBA cash rate announcement should come and go without fanfare and remain at 4.35% before NZ employment data which is predicted to squeeze higher. We think the cross will close the week around 0.9090 (1.10) levels.

The current interbank midrate is: NZDAUD 0.9148 AUDNZD 1.0925

The interbank range this week has been: NZDAUD 0.8970- 0.9171 AUDNZD 1.0903-1.1148

The New Zealand Dollar (NZD) has had a bumper week against the British Pound (GBP) rising from the 0.4565 (2.1900) level Monday to post 0.4680 (2.1380) this morning reversing nearly 2 weeks of poor performances. The Pound has struggled with the latest release of the new government’s public finances. The budget gap is larger than first thought with news this will be filled with higher taxes. The Bank of England (BoE) also cut interest rates last night from 5.25% to 5.0% in a 5/4-member vote weakening the GBP. Next week on the economic docket is NZ employment data with predictions the unemployment rate will rise from 4.3% to 4.7%.

The current interbank midrate is: NZDGBP 0.4663 GBPNZD 2.1445

The interbank range this week has been: NZDGBP 0.4564- 0.4677 GBPNZD 2.1377- 2.1907

The New Zealand Dollar (NZD) looks to post a positive week against the US Dollar (USD), the first in a month as the kiwi came off 0.5860 to trade back at 0.5980 early this morning. US Equity markets have all dipped in overnight trading as markets turned “risk off”- the kiwi falling to 0.5940. Earlier the Fed left their interest rate unchanged at 5.50% as widely predicted with Fed officials acknowledging progress with inflation but not yet comfortable easing policy just yet. Attention now is towards tonight’s US Non-Farm Payroll release and unemployment rate. A drop below 0.5900 may signal further downside to 0.5850 levels.

The current interbank midrate is: NZDUSD 0.5935

The interbank range this week has been: NZDUSD 0.5856- 0.5982