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The Australian Dollar (AUD) 3-week bull run against the US Dollar (USD) took a breather Monday dropping back to 0.6840 from the recent high at 0.6898 as risk sentiment and US equity markets softened. US Holiday Monday meant markets were thinned out, however we did get some rhetoric from the Fed suggesting they are still hawkish taking up the need for more hikes to come. The next meet-July 27th should represent further tightening. Setbacks towards support at 0.6800 should be well supported for the meantime. With odds better than 50/50 of a hike at the RBA”s next meeting July 4th we see upside on the radar.

Current Level: 0.6851
Resistance: 0.6890
Support: 0.6770
Last Weeks Range: 0.6727-0.6899

Losses for the New Zealand Dollar (NZD) continued into Monday against the Euro (EUR) to 0.5675 (1.7620) with their kiwi underperforming of late in the aftermath of a dovish RBNZ. The Euro has also been in the same boat with ECB’s Villeroy suggesting inflation had peaked and interest rates are close to topping out. On the docket this week is German and French manufacturing with poor results for May predicted. This could undermine recent Euro strength.

Current Level: 0.5675 (1.7621)
Resistance: 0.5820 (1.7760)
Support: 0.5630 (1.7180)
Last Weeks Range: 0.5669-0.5749 (1.7392-1.7638)

The New Zealand Dollar (NZD) continues to slide in the wake of the recent recession news. The British Pound (GBP) has looked solid of late gaining on the kiwi to 0.4835 (2.0680) into Tuesday. The GBP boosted recently from the hawkish Bank of England (BoE) rate hike expectations and employment data. The backing off of US equities has also influenced the NZD with risk sentiment not as positive as we saw last week. The 0.4820 (2.0740) low from April 2020 is looking close with predictions it could test this in the coming days. The Bank of England official cash rate releases Thursday with a hike to 4.75% looking likely.

Current Level: 0.5675 (1.7621)
Resistance: 0.4915 (2.0740)
Support: 0.4821 (2.0340)
Last Weeks Range: 0.4845-0.4915 (2.0342-2.0639)

With Australian Jobs data printing better than expected last week we see the chances of the RBA hiking at the July meeting better than 50/50 chance. This has put the Australian Dollar (AUD) back in the driver’s seat over the New Zealand Dollar (NZD) as it’s well supported on any dips. The cross reaching 0.9050 (1.1050) as I write and approaching the yearly low at 0.9020 (1.1090). All the momentum is with the AUD with predictions the RBA may hike at their next meeting in July and the RBNZ saying recently they were done with tightening policy. Through 0.9000 (1.1111) and this sends a strong signal we could see it drift further well into the 80’s. Clients needing to buy AUD should consider at current prices.

Current Level: 0.9047 (1.1043)
Resistance: 0.9160 (1.1090)
Support: 0.9015 (1.0920)
Last Weeks Range: 0.9049-0.9149 (1.0929-1.1050)

Despite the New Zealand Dollar (NZD) dropping off Mondays open below 0.6200 to 0.6190 against the US Dollar (USD) the cross is still trading in its bull channel from late May’s 0.5985 level. A break below 0.6170 however should support a trend shift back towards 0.6100 zones. The recent drop into recession by the NZ economy after GDP first quarter printed at -0.1% should keep the kiwi fundamentally limited to the north especially with the Federal Reserve remaining hawkish over further rate hikes. US Manufacturing data and Fed chair Powell testified towards the end of the week.

Current Level: 0.6199
Resistance: 0.6360
Support: 0.6100
Last Weeks Range: 0.6104-0.6246

Market Overview

Key Points:

• New Zealand second quarter consumer confidence 83.1 vs 77.7 prior
• ECB confirms we will see a rate hike in July, but September is uncertain.
• Airbus lands second massive order of aircraft from India this year of 500 planes following the previous order of 470 making this the biggest order in history with a value of over 300B.
• China cuts lending rates as the economy starts to slow, the PBOC projected to cut rates again on the 20th of June.
• North Korea is said to be increasing its nuclear weapons production.
• The British Pound (GBP) has been the standout performer in the past week compared to the Japanese Yen (JPY), the worst performing currency. Read more

Tuesday June 20 All Day USD Bank Holiday
1:30pm AUD Monetary Policy Meeting Minutes

Wednesday June 21 6:00pm GBP CPI y/y
Forecast: 8.40%
Previous: 8.70%

Thursday June 22
12:30am CAD Core Retail Sales m/m
Forecast: 0.30%
Previous: -0.30%
12:30am CAD Retail Sales m/m
Forecast: 0.30%
Previous: -1.40%
2:00am USD Fed Chair Powell Testifies
All Day CNY Bank Holiday
8:00pm USD FOMC Member Waller Speaks
11:00pm GBP MPC Official Bank Rate Votes
Forecast: 7-0-2
Previous: 7-0-2
11:00pm GBP Monetary Policy Summary
11:00pm GBP Official Bank Rate
Forecast: 4.75%
Previous: 4.50% Read more

The ECB raised their benchmark interest rate to 4.00% from 3.75% with Lagarde saying another hike was expected in July.
New Zealand House Price medium in May is unchanged from April.
China is expected to step in supporting the housing sector further to boost growth.
Recent forecasts are predicting the UK to narrowly avoid drifting into a recession.
The Peoples Bank of China cuts the interest rate from 2.75% to 2.65%.
Analysts are predicting many more rate hikes from the Bank of England to come.
Australian Unemployment dips to 3.6% from 3.7%.
New Zealand Manufacturing contracted in May, the index at 48.9 following 3 months of poor performance and well under the long-term average of 53.0.
The Australian Dollar (AUD) has been the standout performer in the week or May compared to the Japanese Yen (JPY) , the worst performing currency.

The British Pound (GBP) recovered off 2.0340 (0.4915) midweek post the Bank of England (BoE) release clawing back losses against the New Zealand Dollar (NZD) to 2.0550 (0.4865) into Friday. UK GDP rose 0.2% in the month of May with the biggest contribution coming from food and beverage and strong wage growth. The BoE will hike at least one more time in efforts to bring down inflation. Meanwhile NZ q/q GDP also printed – the result not pretty with the economy dropping into a recession with a print of -0.1% following -0.6% in the fourth quarter. Market analysts seem to be on the fence with the timing of rate hikes, many predicting cuts could happen as soon as late this year. The determining factor could be in wages data – if unemployment rises this could be the signal the RBNZ needs. Downside bias remains for the kiwi.

The current interbank midrate is: NZDGBP 0.4878 GBPNZD 2.0500
The interbank range this week has been: NZDGBP 0.4864- 0.4916 GBPNZD 2.0340- 2.0558

The Australian Dollar (AUD) has continued to push higher against the US Dollar (USD) into Friday sessions, the cross reaching 0.6880 a fresh late February 2023 high. Poor Chinese data hasn’t held back the AUD with Industrial Production, Retail Sales and House prices all releasing worse than predicted. Australian employment figures improved in May showing the unemployment dropped from 3.7% to 3.6% as participation grew 79,000. This doesn’t paint the picture the RBA has in mind for a slowing economy casting questions over probability of further hikes from the RBA. The RBA governor Lowe saying inflation pressures are rising and further tightening may be required. Recession fears in the US have eased with analysts left scratching heads over how the economy has been so resilient. The Fed leaving their rate unchanged at 5.25% yesterday while the door is still open for further tightening in July and maybe November.

The current interbank midrate is: AUDUSD 0.6884
The interbank range this week has been: AUDUSD 0.6726- 0.6892