The New Zealand Dollar (NZD) showed signs early in the week of recovering off recent lows but instead carried on its downside path into Tuesday booking a new low of 0.4635 (2.1580) against the British Pound (GBP). It’s hard to see much change this week in a light calendar of data with only UK manufacturing printing Wednesday. Recent higher inflation reads should ensure the kiwi stays out of favour.
Current Level: 0.4646
Resistance: 0.4870
Support: 0.4630
Last Weeks Range: 0.4644 – 0.4723
Price in the Australian Dollar (AUD), New Zealand Dollar (NZD) cross this week is moving within Fibonacci key levels between 0.9220 (1.0850) and 0.9260 (1.0800). The Aussie may come under further pressures this week as investors digest Chinese economic woes. Of consideration are cloudy metal prices led by iron ore coming off over 3% in the last 30 days and a dovish RBA. NZ Retails Sales prints tomorrow, expected to come in at -0.4% for the June quarter.
Current Level: 1.0818
Resistance: 1.0740
Support: 1.0910
Last Weeks Range: 1.0779 – 1.0876
Price in the Australian Dollar (AUD), New Zealand Dollar (NZD) cross this week is moving within Fibonacci key levels between 0.9220 (1.0850) and 0.9260 (1.0800). The Aussie may come under further pressures this week as investors digest Chinese economic woes. Of consideration are cloudy metal prices led by iron ore coming off over 3% in the last 30 days and a dovish RBA. NZ Retails Sales prints tomorrow, expected to come in at -0.4% for the June quarter.
Current Level: 0.9239
Resistance: 0.9310
Support: 0.9165
Last Weeks Range: 0.9194 – 0.9277
Downside pressures in the New Zealand Dollar (NZD) eased slightly Monday against the US Dollar (USD) with price settling around the weekly open at 0.5925 this morning. With Fed’s Powell expected to deliver a hawkish speech later this week at the Jackson Hole event around how much interest rates could go in order to drag down inflation his comments may spook the markets. After all, recently we have been prepped for interest rate cuts in 2024 something markets had originally been forecasting to happen as soon as late this year. Rhetoric suggesting the fight against inflation is “far from over’ will most likely be the theme. NZ Retail Sales prints tomorrow, predicted to come in poor and later this week we have US consumer sentiment.
Current Level: 0.5927
Resistance: 0.6400
Support: 0.5900
Last Weeks Range: 0.5901 – 0.5994
Market Overview
Key Points:
• The New Zealand Dollar and Australian Dollar have both kicked off the week wobbly based on last week’s bearish pressures.
• The New Zealand Trade deficit widened from 0.11B to 1.11B in July as imports dropped 16% and exports fell 14%
• German producer prices fell 1.1% m/m for July vs 0.1% expected.
• US Treasury yields rise again, the 10-year bond rising to a 2007 high.
• Latest signs are that the Bank of Canada (BoC) will remain on hold at the September meeting.
• Chinese growth forecast for 2023 shifts from 5.2% to 4.8%, meanwhile the People’s Bank of China (PBOC) cuts their prime 1-year rate to 3.45% from 3.55% – no cut to the 5 year came as a surprise.
• The British Pound (GBP) has been the strongest currency this week with the Australian Dollar (AUD) the worst performer.
Major Announcements last week:
• Chinese Retail Sales y/y 2.5% vs 4.2% expected
• US Retail Sales for July 0.7% vs 0.4%
• RBNZ retain cash rate at 5.5%
• UK CPI y/y 6.8% vs 6.7% predicted
• Australia unemployment rate 3.7% up from 3.6%
The US Dollar (USD) has lengthened out its hold over the Australian Dollar (AUD) to 0.6400 levels this morning earlier yesterday reaching 0.6365. The cross has cleared all remaining support levels of late with the remaining significant long-term support remaining at 0.6140. A mix of factors hasn’t helped the Aussie of late- “risk” markets were softer overnight, Chinese outlook fears and a dovish RBA all contributing. On the plus side Australian unemployment jumped from 3.5% to 3.7% strengthening the case for the RBA to hold rates for some time ahead. Meanwhile the Fed minutes wash up confirmed the Federal Reserve still sees inflation risks ahead and a potential need to raise rates if required. Sell the dip, buy the rip.
The current interbank midrate is: AUDUSD 0.6419
The interbank range this week has been: AUDUSD 0.6363- 0.6520
Different week- same result, in the New Zealand Dollar (NZD), US Dollar (USD) cross with the kiwi slipping again to fresh lows around 0.5930 levels. Well under the 0.6000 support line now it’s hard to see the NZD bouncing back with any gusto. The Reserve Bank of New Zealand confirmed they are happy with the current cash rate at 5.50% which has been constraining spending and inflation pressures. Fed minutes suggested they are hanging off rises in unemployment and slower growth in order to bring down inflation to target levels with a recession now on the cards later this year. On the chart the NZD looks into the abyss all the way to 0.5550.
The current interbank midrate is: NZDUSD 0.5936
The interbank range this week has been: NZDUSD 0.5903- 0.5997
FX Update
Key Points:
The New Zealand Dollar (NZD) continued its downward spiral late last week reaching 0.5980 closing below key support at the big figure- 0.6000 against the US Dollar (USD). Monday’s action has extended moves to the downside clocking 0.5950 in early Tuesday. To be honest, the kiwi looks “down for the count” at the moment trading into thin air through 0.6000 was a major signal we could see bigger moves into the 0.50’s. It’s a busy week of releases for the pair with a slew of data to publish. The RBNZ official cash rate is expected to hold rates at 5.50% followed by Fed minutes Thursday. At some point the NZD will bounce higher, buyers of USD should grab the spikes.
Current Level: 0.5974
Resistance: 0.6360
Support: 0.5930
Last Weeks Range: 0.5974 – 0.6117
Mid last week, prices in the Euro (EUR), Australian Dollar (AUD) cross fell through long term support at 0.5960 (1.6780) to reach 0.5930 (1.6860) at the close. Trading into Monday extended this run to 0.5910 (1.6930) before reversing to 0.5950 (1.6815) early Tuesday. If we look back 1 year on the chart to August 2022 we see a familiar pattern of lower highs followed by lower lows constantly repeating. Looking ahead we see Australian employment data Thursday with unemployment expected to tick higher from 3.6%.
Current Level: 1.6815
Resistance: 1.7200
Support: 1.6650
Last Weeks Range: 1.6685 – 1.6884