USD

FX News

FX Update: RBA focus

Market Overview

Key Points:

• US and Canada holidays create a quiet start to the week.
• Comments from ECB’s Lagarde- It’s critical for central banks to keep inflation expectations anchored. The chances of an ECB hike this month is 30%
• Oil closes at 85.80 the highest since November 2022
• Chinese Govt to create a new body to support the failing private sector as confidence plunges among businesses.
• US Non-Farm Payrolls slowed as the labour market starts to cool off. Unemployment rose from 3.5% to 3.8% suggesting the recent work done by the Federal Reserve is working.
• The New Zealand Dollar (NZD) was the strongest currency last week with the Euro (EUR) the worst performer.

Major Announcements last week:
• US Consumer Confidence Index dips to 106.1 from 114.0
• Australian CPI y/y 4.9% down from 5.4%
• US prelim GDP second quarter 2.1% based on expectations of a 2.4% read
• Chinese Caixin Manufacturing PMI beat estimate of 49.0 coming in at 51.0
• US Unemployment 3.8% vs 3.5% expected

FX News

AUD/EURO Transfer

German inflation remains stubbornly high, despite flagging economic activity, in the economy. Germany is in danger of a potential de-industrialisation, which can only harm the Eurozone, as a whole. The ECB has acted conservatively in their interest rate policy, but they may be forced to act ‘further and longer’ with rate rises. Inflation had been falling steadily in many EU Countries, but those precipitous falls, appear to have been arrested, with inflation rises in Germany, France and elsewhere in the Zone. The cross rate is likely to suffer accordingly.

Current Level: .5975
Support: .5925
Resistance: .6010
Last week’s range: .5955 – .5995

FX News

AUD/USD Transfer

The AUD has plunged all the way down to below 0.6400, suffering the weight of a resurgent US Dollar. This is likely to continue, as US inflation remains stubbornly high. Domestic markets will be focused on the RBA in the coming week, as they reveal their latest monetary policy decision. The RBA is expected to hold rates unchanged, but close attention will be paid to the narrative. It is likely to warn of hotter inflationary conditions. The RBA has ‘paused’ rate rises, as a direct result of intense political pressure, maintaining rates at lower levels than most Western Central banks. The premature pause has left the RBA vulnerable, as interest rate differentials offer selling opportunities. Downside pressures remain.

Current Level: .6478
Support: .6405
Resistance: .6510
Last week’s range: .6390 – .6480

FX News

NZD/EURO Transfer

The ECB Chair, LeGarde, warned of continued inflationary pressures and further rate rises at the Jackson Hole Symposium. The floundering economic situation in the Eurozone remains dire, especially in the ‘engine-room’, that was Germany. German Industrial/Manufacturing Production has been under severe pressure, from extremely elevated energy costs, with warnings that Government subsidies may be coming to an end. Flagging global demand for exports and a precipitous collapse in imports, are revealing a possible structural crisis. The prospects of further interest rate rise, supporting the EUR and the cross rate, will probably mean more downward pressures.

Current Level: .5501
Support: .5420
Resistance: .5525
Last week’s range: .5455 – .5510

FX News

NZD/USD Transfer

The NZD/USD has been subject to the machinations of the reserve currency, the US Dollar. The Jackson Hole Symposium, closing out last week, shed no new light on monetary policy. Fed Chairman Powell continued to warn of high inflation and further possible interest rate rises. Par for the course. PCE readings of inflation this week, confirmed it remained stubbornly high, increasing the risk of further rate rises. The NZD has plunged all the way back to 0.5900 and looks likely to remain under pressure, while the USD is supported by rising interest rates.

Current Level: .5962
Support: .5900
Resistance: .5990
Last week’s range: .5900 – .5980

FX News

AUD/USD Transfer

The Australian Dollar (AUD) held firm around the 0.6425 area post the open against the USD Dollar (USD) Monday as equity markets traded positive. It’s hard to know if we will see a reversal of sorts this week and a push higher, but with improved sentiment in China after an improved May manufacturing PMI read who knows. Australian Retail Sales came in hot at 0.5% in July after a poor June release surprising analysts as shoppers came out during the FIFA Women’s World Cup. Despite this the RBA is still likely to raise rates at the September 5 meeting. Looking ahead we have US Non-Farm Payroll Friday which will add volatility to the mix.

Current Level: 0.6432
Resistance: 0.6365
Support: 0.6500
Last Weeks Range: 0.6385 – 0.6488

FX News

EURO/AUD Transfer

No real moves early this week in the Euro (EUR), Australian Dollar (AUD) pair has price sitting around the 0.5940 (1.6830) area as we head into Tuesday. Aussie Retail Sales surprised with a 0.5% rise in July up on expectations of 0.2% and well above June’s -0.8%. A combination of dining out and the Women’s world cup football tournament impacting. The AUD may retest last week’s high of 0.5970 (1.6750) this week as Chinese pessimism improves and if equities remain buoyant.

Current Level: 1.6846
Resistance: 1.7065
Support: 1.6275
Last Weeks Range: 1.6751 – 1.7037

FX News

AUD/EURO Transfer

No real moves early this week in the Euro (EUR), Australian Dollar (AUD) pair has price sitting around the 0.5940 (1.6830) area as we head into Tuesday. Aussie Retail Sales surprised with a 0.5% rise in July up on expectations of 0.2% and well above June’s -0.8%. A combination of dining out and the Women’s world cup football tournament impacting. The AUD may retest last week’s high of 0.5970 (1.6750) this week as Chinese pessimism improves and if equities remain buoyant.

Current Level: 0.5936
Resistance: 0.6145
Support: 0.5860
Last Weeks Range: 0.5869 – 0.5969

FX News

GBP/AUD Transfer

The Australian Dollar (AUD), British Pound (GBP) has been unmoved since Wednesday sitting around the 0.5100 (1.9600) mark into early Tuesday sessions. Australian Retail Sales surprised at 0.5% vs 0.2% expected in July and up from -0.8% in June. Food and FIFA Women’s World Cup to blame for the unexpected rise in spending. Looking ahead we have the Australian monthly CPI forecast to print around 5.2% in July down from June’s 5.4%. The pair has crossed above the 100-day moving average this morning signalling we may see a little more AUD strength to come.

Current Level: 1.9623
Resistance: 2.0000
Support: 1.9350
Last Weeks Range: 1.9581 – 1.9929