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Another big day in US equities took the New Zealand Dollar higher, extending the bull run from last week against the US Dollar (USD) to the 0.6230 zone. The New Zealand economy slipped into a technical recession with GDP results published yesterday for the 1st quarter at -0.1% adding to the fourth Q result of -0.6%. Two schools of thought suggest NZ could be either hiking by year end or conversely the RBNZ will hold until mid-2024. The job market holds the key in our minds, unemployment data is not published until 1st August, anything tight around current 3.40% showing persistence could ultimately force the hand of the RBNZ. Meanwhile the US Fed kept their interest rate on hold at 5.25% pausing as they said they would, ending a 10-run streak of hikes. The hawkish tone of inflation remains with expectations of further hikes in July and possibly November. Despite the run north by the kiwi over the past 2 weeks we still maintain our dovish view of the kiwi over the mid to long term.

The current interbank midrate is: NZDUSD 0.6237
The interbank range this week has been: NZDUSD 0.6104- 0.6242

The Australian Dollar (AUD) has done well over the week to hold ground around 0.5385 (1.8570) areas after a slew of poor data published in China. However, with wage growth figures up- the unemployment rate dropping from 3.7% to 3.6% this has cast doubt over forecasting that the economy is slowing with employment participation increasing over 79k in the month of May. We see further tightening in the coming months eventuating and the widening yield differentials pushing the cross into 0.5260 (1.9000) territory over the coming weeks.

The current interbank midrate is: AUDGBP 0.5381 GBPAUD 1.8583
The interbank range this week has been: AUDGBP 0.5347- 0.5406 GBPAUD 1.8497- 1.8699

New Zealand’s GDP came in softer than predicted, contracting -0.1% for the first quarter 2023 to go with the -0.6% in the fourth quarter of 2022 pushing the country into a formal recession. Recent weather and soaring interest rates have taken a toll on the consumer. Signs are the economy could be in for several poor quarters increasing the likelihood of the RBNZ cutting rates. At the moment the central bank are not predicted to start cutting until mid-2024, we expect this to be reviewed formally over the coming weeks. Aussie jobs data came in hot with the unemployment rate dropping from 3.7% to 3.6% suggesting the RBA could be eying up further tightening in the coming months. A close below the key support at 0.9000 (1.1110) over the next few days would give guidance for further weakness in the NZD.

The current interbank midrate is: NZDAUD 0.9062 AUDNZD 1.1030
The interbank range this week has been: NZDAUD 0.9052- 0.9148 AUDNZD 1.0931- 1.1047

A market shift in sentiment has taken the Australian Dollar (AUD) off recent lows around 0.6060 (1.6500) to 0.6275 (1.5930) this morning against the Euro (EUR) , a decent swing in a short amount of time. Comments from Villeroy around the slowdown in France’s inflation and soft data out in Italy have had the Euro on the backfoot. However, talk of higher interest rates should have the Euro well supported on dips. Looking ahead we have ECB’s interest rate and monetary policy out Friday with expectations of a hike from 3.75% to 4.00%- their 8th consecutive hike, in theory this should give the EUR a nudge. This comes as the European area slips into recession.

Current Level: 0.6273 (1.5941)
Resistance: 0.6290 (1.6150)
Support: 0.6190 (1.5900)
Last Weeks Range: 0.5638-0.5694 (1.7561-1.7734)

Positive risk sentiment and a hawkish RBA continue to push the Australian Dollar (AUD) off recent lows against the British Pound (GBP) Monday as it reached 0.5400 (1.8530). 10 days back the cross clocked 0.5215 (1.9180) so a reasonably big correction. UK wage growth continues to stay high, the lack of staff the big driver, suggesting the Bank of England (BoE) will hike rates further and any cuts will be later than first thought. On the calendar are Aussie job numbers Thursday with unemployment at 3.7% predicted to stand. We are expecting a little more momentum in the AUD this week.

Current Level: 0.5395 (1.8535)
Resistance: 0.5415 (1.9000)
Support: 0.5265 (1.8470)
Last Weeks Range: 0.4851-0.4903 (2.0393-2.0613)

The Australian Dollar (AUD) has extended gains Monday clocking 0.6770 a far cry from the early June low of 0.6460 as sentiment improves and equities rally. The Aussie has been the outstanding performer in June offsetting recent talk of higher chances of the Australian economy falling into a recession. A massive week of economic data is releasing over the next few days highlighted by Fed rate release and Australian Unemployment. With expectations of the Fed cutting rates in the 4th quarter this could undermine the greenback and bring in the Aussie carry trade into play. However, we don’t rule out 1 further hike in the next couple of months, the scales are still tipped to the downside for the pair.

Current Level: 0.6753
Resistance: 0.6810
Support: 0.6700
Last Weeks Range: 0.6575-0.6750

The New Zealand Dollar (NZD) has done well in the past few days of trading, clawing back recent losses to hit back at 0.57100 (1.7520) into Tuesday. The Euro came under selling pressures after France’s Villeroy commented about a slowdown in inflation and general risk sentiment improved. This week’s economic docket sees NZ quarterly GDP print Thursday before the ECB’s policy statement and interest rate release. The ECB will hike 25 points to 4.00% as the area faces inevitable recession. With the RBNZ suggesting no further rate hikes we could see the Euro make gains and retest 0.5610 (1.7830).

Current Level: 0.5685 (1.7590)
Resistance: 0.5720 (1.7830)
Support: 0.5610 (1.7480)
Last Weeks Range: 0.5638-0.5564 (1.7560-1.7736)

It’s been thin picking of late for economic data in the New Zealand Dollar (NZD), British Pound (GBP) pair since the Bank of England hiked rates recently. GBP demand has been strong with increased hawkishness the central bank will again hike at their 22 June meeting. The New Zealand Dollar (NZD) recovered off 0.4820 (2.0740) to trade back around the 0.4895 (2.0430) mark against the British Pound in early Tuesday. Risk sentiment supporting the kiwi as US equities rallied late last week. All eyes are on both UK and NZ GDP releases this week the NZ economy predicted to formally slip into recession with a print of -0.1% following a -0.6% in the previous quarter.

Current Level: 0.4890 (2.0449)
Resistance: 0.4910 (2.0740)
Support: 0.4820 (2.0380)
Last Weeks Range: 0.4850-0.4904 (2.0389-2.0616)

Price has stalled just above 0.9000 in the New Zealand (NZD), Australian Dollar (AUD) pair over the past few days, camped out between 0.9000 and 0.9100, the pair awaits further drivers. This may well come in the form of NZ quarterly GDP Thursday; with predictions it could print red and drop the NZ economy into recession following -0.6% in the fourth quarter. Aussie job numbers release Thursday and should stay solid at 3.7% unemployment. Any jump could squeeze the NZD higher. Overall, it’s hard to see the kiwi back at 0.91-92 levels in the near term.

Current Level: 0.9063 (1.1024)
Resistance: 0.9140 (1.1080)
Support: 0.9025 (1.0940)
Last Weeks Range: 0.9065-0.9190 (1.0881-1.1031)

The New Zealand Dollar (NZD) sits around the weekly open at 0.6125 against the US Dollar (USD) after rising from 0.6030 mid last week. The greenback has been broadly under pressure as equity markets post yearly highs turning markets risk on. Slowing NZ economic growth and activity has led to the RBNZ recently adopting a more neutral stance while other central banks are still hawkish. US CPI Wednesday followed by FOMC and interest rate release Thursday together with NZ GDP will hold our attention. The NZ economy is expected to slide into a formal recession with the release of -0.1% growth in the 1st quarter after -0.6% in the fourth with significant factors affecting the economy with poor weather disruptions and rising interest rates. At 0.6150 this represents good buying of USD on the recent move north.

Current Level: 0.6124
Resistance: 0.6000
Support: 0.6260
Last Weeks Range: 0.6028-0.6137