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The UK inflation number was expected to fall dramatically, but instead remained stubbornly high, forcing the Bank of England to raise rates a further 50 basis points. In Europe inflation had been falling dramatically, until this week’s release of German inflation numbers. The German number actually reversed course, and rose, from 6.1% to 6.4%. The ECB has continued to commit to more rate rises, and joins all other major Central Banks, with a hawkish monetary policy stance.

Current Level: 0.4820 (2.0747)
Support: 0.4800 (2.0833)
Resistance: 0.4900 (2.0410)

The NZD underperformed the AUD over the last week, as commodity currencies struggled recessionary pressures and the insipid economic recovery in China. The cross rate lost a ‘Big Figure’, falling from 0.9250, to 0.9150. Economic conditions in NZ remain challenging, in a high interest rate environment. NZ Business Confidence shows signs of improvement, but remains heavily depressed.

Current Level: 0.9184 (1.0888)
Support: 0.9121 (1.0965)
Resistance: 0.9250 (1.0810)

The NZD crashed back to earth over the last week, heading back towards 0.6000, after reaching up as high as 0.6200. The Central Bank meeting in Sintra, Portugal, was extremely hawkish and the message was, rates were going to be ‘higher for longer’. Inflation remains the key driver of interest rates and this is forcing recessionary economic conditions, thus undermining commodity currencies.

Current Level: 0.6086
Resistance: 0.6200
Support: 0.6000

The Euro (EUR) extended moves on the Australian Dollar (AUD) Monday to 0.6112 (1.6360) despite taking on water from recent terrible data. Softer Eurozone PMI and French and German manufacturing releases were all below expectation with the German ifo – its most weighty economic indicator failing to impress after slow Chinese re-opening and policy tightening dampened sentiment. This week’s Australian CPI y/y release holds interest with predictions this could come in higher than markets are expecting.

Current Level: 0.6120 (1.6339)
Resistance: 0.6180 (1.6500)
Support: 0.6060 (1.6180)
Last Weeks Range: 0.6121-0.6294 (1.5888-1.6336)

The British Pound (GBP), Australian Dollar (AUD) looks to be consolidating around the 0.5250 (1.9050) area into Tuesday after a decent move from 0.5375 (1.8600) last week. Sitting close to the long-term low at 0.5200 (1.9225) we believe further GBP flow should push the pair through this level in the coming hours/days for the first time since the Brexit vote in 2016. The key release of the week is Aussie CPI y/y which has potential to tick higher than the current 6.8% and question recent RBA narrative.

Current Level: 0.5253 (1.9036)
Resistance: 0.5350 (1.9180)
Support: 0.5215 (1.8700)
Last Weeks Range: 0.5237-0.5380 (1.8586-1.9094)

Major Announcements last week:
UK CPI rises from 8.4% to 8.7% y/y.
Bank of England hike cash rate 50 points from 4.50% to 5.0%.
UK Retail Sales prints at 0.3% vs -0.2% expected.
French and German manufacturing prints poor losing recent momentum.

The Australian Dollar (AUD), USD Dollar (USD) cross has consolidated around 0.6670 levels into Tuesday after large moves last week from 0.6870. The Aussie being hit from lower metal prices, poor sentiment in China and growth prospects. Growth has been revised lower and is expected to slow heading into the 4th quarter dragged lower by weakness in consumption and the chances of the economy falling into a recession, This week’s inflation report should give us clues as to price pressures and how the RBA could react. We expect the central bank to hike in July, but the decision isn’t a given. The key fibonacci level at 0.6670 may lend support to AUD upside.

Current Level: 0.6678
Resistance: 0.6800
Support: 0.6570
Last Weeks Range: 0.6661-0.6882

The New Zealand Dollar (NZD) has been the standout performer over the past few days of trading but no match for the Euro pushing the kiwi to a 3-week low to 0.5615 (1.7810) at week’s end. The Euro remains well supported despite a slew of awful data publishing. French and German manufacturing came in light and German PMI was disappointing, the figure at 88.5 falling to a post covid low. ECB’s Lagarde is speaking at a number of engagements over the week we also have German, Spanish and Italian CPI prints. The EUR is supported by the 50-day moving average with moves likely towards 0.5550 (1.8000).

Current Level: 0.5647 (1.7708)
Resistance: 0.5730 (1.8060)
Support: 0.5540 (1.7450)
Last Weeks Range: 0.5614-0.5707 (1.7522-1.7810)

The New Zealand Dollar (NZD) is a little stronger off the weekly open against the British Pound (GBP) reaching 0.4860 (2.0570) into Tuesday trading. Generally speaking, a lack of data sees the pair happy to bounce around in recent ranges. Better than expected UK Retail Sales Friday boosted the GBP coming in at 0.3% compared to -0.2% predicted. We still see decent flows in the GBP from last week’s Bank of England hike to 5.00% continuing. The Key standout on the docket this week is the RBNZ “Statement of Intent” Friday. We see a retest of the recent low at 0.4830 (2.0700) a chance this week.

Current Level: 0.4847 (2.0631)
Resistance: 0.4910 (2.0800)
Support: 0.4810 (2.0380)
Last Weeks Range: 0.4808-0.4879 (2.0496-2.0797)

Surprisingly the Australian Dollar (AUD) continues to give back gains early this week extending moves to 0.9250 (1.0815) where it looks to have settled. Sliding commodities and the latest global sentiment read has benefited the AUD more favourably. If the RBA hikes next week this could change things up. Focus this week will be on Australian CPI data, moves over the week could well be dictated by this pending print. A release higher from the current 6.8% y/y will no doubt deflect more investors away from the NZD.

Current Level: 0.9224 (1.0830)
Resistance: 0.9440 (1.1020)
Support: 0.9075 (1.0590)
Last Weeks Range: 0.9048-0.9207 (1.0861-1.1051)