USD

Thin Christmas and New Year markets along with US Holiday trading in the New Zealand Dollar (NZD), US Dollar (USD) cross meant we haven’t had big moves of late. The pair mostly pivoted around the 0.6250 levels through to Monday when we saw a slide in the kiwi down to 0.6180 mostly based on central bank divergence. Global themes have also started to weigh on the NZD with Gaza conflicts and energy prices not to mention a poor Chinese growth read. Interest rate cuts are now starting to come into conversation more with predictions the RBNZ may have 100 points priced in for 2024.The New Zealand economy is expected to cool further in the first half of 2024. Thursday’s US Retail Sales for December should be decent.

Current level: 0.6169
Support: 0.6170
Resistance: 0.6360
Last week’s range: 0.6194-0.6276

Finance minister Nicola Willis delivered her mini budget over the week finding 7.5B of savings as the new National Govt cuts back on several Labour led initiatives. There was no real shift to the New Zealand Dollar (NZD) post the release however the kiwi posted new highs against the US Dollar (USD) reaching 0.6295 a late July high. If we look back over 2023 the kiwi has underperformed for most of the year to mid-October when it pulled back most of the losses over 2023. The cross started the year circa 0.6330 so we are not far off this. US UoM Consumer Sentiment prints in the morning and should reflect a similar positive result to earlier week Consumer Board confidence. Markets over the Xmas/NY dates will be thin and volatile; we expect reasonable shifts in the cross. Leaving orders with us is the way to go if you are targeting a specific level.

The current interbank midrate is: NZDUSD 0.6287

The interbank range this week has been: NZDUSD 0.6187- 0.6297

Over 2023 the New Zealand Dollar (NZD), Australian Dollar (AUD) cross has traded in a range between 0.9100 and 0.9430 for over 90% of the time. We have not seen any big runs one way or another as the NZD/AUD remained converged for most of the year. The pair started the year around 0.9320 (1.0730) and trades today at 0.9250 (1.0810). The RBA minutes signalled the central bank considered raising rates before deciding to stand down saying they would wait for incoming data such as inflation and employment data to make further calls. The next data release is Australian CPI y/y on the 10th of Jan. Until then we could see the Aussie make further gains to retest 0.9175 (1.0900)

The current interbank midrate is: NZDAUD 0.9244 AUDNZD 1.0806

The interbank range this week has been: NZDAUD 0.9244- 0.9300 AUDNZD 1.0752- 1.0817

The New Zealand Dollar (NZD) closed the week out around 0.9270 (1.0790) against the Australian Dollar (AUD) extending losses throughout the week from 0.9375 (1.0670) numbers. Data out in the form of NZ GDP q/q ending September wasn’t so NZD supportive after printing at -0.3% vs 0.2% expectations lowering the kiwi. Fears of another NZ recession have crept back into conversations with questions being raised on whether the RBNZ have raised too far with 4th quarter growth predictions to worsen. The Aussie was further boosted by Aussie unemployment numbers jumping to 3.9% a June 2022 high despite jobs numbers coming in hot at 61,500 compared to 11,000 predictions. What this means is the central bank will keep rates at 4.25% for longer with the caveat being incoming jobs reports and inflation forecasts. On the chart we saw a small pullback to 0.9295 (1.0760) in the kiwi to start the week but this was short lived with price back around 0.9260 (1.0800) this morning. With no proper data on the docket this week we should see the cross bounce around the 0.9200 (1.0870) – 0.9300 (1.0750) zone.

The current interbank midrate is: NZDAUD 0.9262 AUDNZD 1.0784

The interbank range this week has been: NZDAUD 0.9260- 0.9295 AUDNZD 1.0758- 1.0798

The New Zealand Dollar (NZD) shifted higher late in the week against the US Dollar (USD) pushing into the 0.62’s after a massive re-think in Fed sentiment. Price reached 0.6250 as the Fed delivered their unchanged cash rate announcement. The Fed said they would keep rates as they are until mid-2024 when they expect to cut rates around June, possibly twice more before the end of the year. Earlier US CPI printed at 3.1% y/y bang on forecast throwing doubt into whether the Fed would price in cuts. NZ GDP q/q released at -0.3% down on 0.2% expectations, the economy contracting more than markets were forecasting and stoking fears of another recession is on the cards. Have the RBNZ raised rates too much in efforts to aggressively bring down inflation which is still 5.6%. It’s now a strong likelihood the central bank will consider cutting sooner over later in 2024. Through most of 2023 the kiwi has been mostly bearish, we believe we may have seen a shift to a bullish tone over November with pricing reversing off mid 57’s, strong support is now 0.6000.

The current interbank midrate is: NZDUSD 0.6211

The interbank range this week has been: NZDUSD 0.6187- 0.6250

The New Zealand Dollar (NZD) underperformed towards the end of the week against the US Dollar (USD) falling to 0.6110 levels as strong US data printed. Into Tuesday morning trade we have seen a small perk up in the kiwi to 0.6130 but topside this week could be tough going. We will get a look at US CPI tomorrow, predicted to dip lower from 3.2% to 3.1%. Anything around 3.2% will almost certainly set the scene for another round of interest rate hikes in order to bring down inflation to Fed target levels. Markets however would love to see a decent fall to bring forward rate cuts forecast for third quarter 2024.

The current interbank midrate is: NZDUSD 0.6120

The interbank range this week has been: NZDUSD 0.6104- 0.6131

Higher lows followed by higher highs in December continue to dominate the chart in the Australian Dollar (AUD), New Zealand Dollar (NZD) cross. The bull trend from late last week’s 0.9300 level to 0.9340 early this morning could signal further upside for the kiwi. NZ GDP prints Thursday for the third quarter ending September 30 and should highlight modest growth in the economy (0.2%) However, by removing migration the economy is expected to contract over the next 12 months. Aussie unemployment is predicted to increase slightly off 3.7% Thursday.

The current interbank midrate is: NZDAUD 0.9315 AUDNZD 1.0724

The interbank range this week has been: NZDAUD 0.9306- 0.9339 AUDNZD 1.0707- 1.0745