AUD/USD Transfer:

Trading Thursday took the Australian Dollar (AUD), US Dollar (USD) from 0.6820 to 0.6700 levels into Friday, the Aussie giving back gains as market risk mood deteriorated. News that Rio Tinto had cut its dividend payment as earnings fell to its lowest level in 3 years weighed on the AUD. Earlier in the week Australian inflation dipped to 5.4% in the 12 months to June compared to 5.5% in the 12 months to May 2023, Quarterly the rate has dipped to 6.0% ending June from 7.0%, lower than the 6.20% consensus. Meanwhile, the Fed lifted rates to 5.5% as widely predicted, resuming their tightening policy yesterday which takes them to a 22 year high. Powell saying it was too early to make a call on whether they would need to raise further. We expect moves to extend to the downside with price to potentially retest support at 0.6600.

The current interbank midrate is: AUDUSD 0.6710
The interbank range this week has been: AUDUSD 0.6699- 0.6821

NZD/AUD Transfer:

Fibonacci support held mid-week in the Australian Dollar (AUD), New Zealand Dollar (NZD) pair at 0.9160 (1.0920) as we predicted with price moving to the upside to 0.9230 (1.0834). Aussie inflation data printed Wednesday weakening the AUD as CPI in Australia dipped to 5.4% in the 12 months to June compared to 5.5% in the 12 months to May, quarterly the rate has moderated to 6.0% ending June from 7.0%, lower than 6.20% consensus. Looking ahead we have the RBA cash rate announcement Tuesday which should deliver a rise from 4.10% to 4.35%. Topside moves look overbought with price starting to reverse, we expect the 0.9200 (1.0870) to retest prior to the weekly close.

The current interbank midrate is: NZDAUD 0.9216 AUDNZD 1.0843
The interbank range this week has been: NZDAUD 0.9152- 0.9232 AUDNZD 1.0826- 1.0926

AUD/GBP Transfer:

The Australian Dollar (AUD) retraced midweek gains against the British Pound (GBP) trading from 0.5280 (1.8930) back to 0.5215 (1.9180) post the Australian CPI release. Inflation dipped to 5.4% in the 12 months to June compared to 5.5% in the 12 months to May 2023, Quarterly the rate is down to 6.0% ending June from 7.0%, lower than the 6.20% consensus. This marks the lowest figure since the third quarter of 2022 which has been primarily driven by a slowdown in food prices. Next week it’s all about central bank cash rate releases with both the Bank of England and Bank of Australia releasing. The RBA is expected to hike 25 points to 4.35% while the BoE may go large and raise 50 points instead of earlier forecasts for just a 25-point shift. Trendline support should hold at the 0.5235 (1.9100) level with price to retrace back towards 0.5280 (1.8940) zone.

The current interbank midrate is: AUDGBP 0.5244 GBPAUD 1.9069
The interbank range this week has been: AUDGBP 0.5214- 0.5282 GBPAUD 1.8934- 1.9180

NZD/USD Transfer:

The New Zealand Dollar (NZD) slipped below key 0.6200 yesterday against the US Dollar (USD) clocking 0.6180 into Friday trading as it looks bearish. Markets turned risk averse buying the greenback in post “Fed” selling, the Fed raising rates 25 points to 5.50% the 11th raise since March 2022 and a 22 year high. It’s possible this could be the last hike in this cycle with inflation coming down recently although the Fed remains open to further tightening if inflation throws a curveball. Also of note, the Fed aren’t predicting a recession in 2023, Powell adamant the US economy will come down soft. Technically the pair is trading at the bottom of an uptrend channel suggesting we may see the kiwi push back to 0.6200 in the near term.

The current interbank midrate is: NZDUSD 0.6185
The interbank range this week has been: NZDUSD 0.6155- 0.6273

Key Points This Week:

FX Update

Key Points:

With Russia pulling out of the Black Sea grain agreement this is not expected to have a massive impact on US food prices and inflation.
We see a 25% chance the US will fall into recession over the next 12 months.
Australian Inflation cooled more than expected for quarter 2, 2023 easing pressures on the Bank of Australia to raise rates at the next policy meeting 1st August.
The ECB raised their cash rate to 3.75% from 3.5% this morning as expected, the central bank going ahead with further tightening to combat high inflation despite fears of a recession.
US advanced GDP 2.4% vs 1.8% expected.
The Japanese Yen (JPY) is the strongest performer over the week with the Euro (EUR) the worst performer.

AUD/EUR Transfer:

As we predicted last week we have seen further buying of EUR with price reaching a fresh low of 1.6600 (0.6025) mid last week against the Australian Dollar (AUD) a 3-month low. The Aussie fought back off the Monday open to trade back at 1.6400 (0.6100) levels after eurozone manufacturing and services data came in poor. Australian CPI y/y prints Wednesday and is predicted to come way down off the current 7.0% to around 5.5% forecast, anything higher than this could spike the AUD. This is followed by the ECB refinancing rate Thursday evening when we expect the ECB to hike 25 points to 4.25%. Comments should be hawkish around further policy tightening required. We expect the pair could retest 0.6000 (1.6660) areas.

Current Level: 0.6080 (1.6447)
Resistance: 0.6160 (0.6780)
Support: 0.6040 (1.6230)
Last Weeks Range: 0.6023-0.6105 (1.6380-1.6602)

AUD/GBP Transfer:

The Australian Dollar (AUD) reversed off 1.9140 areas Monday back to 1.8990 against the British Pound (GBP), UK data undermining the Pound. Although Retail Sales Friday turned in a positive result at 0.7% vs 0.2% for June Manufacturing PMI has undone any momentum the GBP had. Figures show a considerable slowing of business and manufacturing output, the worst in 6 months. We see odds of a hike from the Bank of England (BoE) of 50 points now slim in the aftermath of this cooler data with calls for just 25 points to 5.25% on August 3rd. A light data docket in the cross should see the GBP weaken further confirmed by higher highs and higher lows on the chart.

Current Level: 0.5251 (1.9043)
Resistance: 0.5405 (1.9340)
Support: 0.5170 (1.8500)
Last Weeks Range: 0.5189-0.5305 (1.8849-1.9271)

AUD/USD Transfer:

The Australian Dollar (AUD) closed the week around 0.6255 against the US Dollar (USD) declining more than 1% on the week. Prices into Tuesday are bouncing around open levels as we await key data this week. Australian CPI was predicted to cool fast over the year with Wednesday’s release expected to confirm this with a much anticipated 5.5% print from 7.0% y/y for June. If we see this number we can expect the RBA will be relieved and take onboard a more relaxed policy approach, however one can never rule out further hikes. The Federal Reserve policy and cash rate release is Thursday Morning with a hike most likely of 25 points expected taking the cash rate to 5.50%. Powell’s objective is to soften the US economy enough to not send it into a recession. The question remains- how much inflation can he tolerate to not hike Thursday and over the remainder of 2023. We predict an improvement in price with a possible retest of the 0.6800 zone.

Current Level: 0.6731
Resistance: 0.6700
Support: 0.6600
Last Weeks Range: 0.6721-0.6847

NZD/EUR Transfer:

Price in the Euro (EUR), New Zealand Dollar (NZD) cleared solid support Monday at 0.5555 (1.8000) to reach a fresh low of 0.5535 (1.8070) matching an August 2020 level. An underperforming EUR post a slew of eurozone manufacturing and services industry reads sent the Aussie higher retracing a chunk of last week’s declines. Manufacturing in the region looks asleep at the wheel, the worst result in months. Indicators point to slowing weakness in the second and third quarters. All eyes will be on the ECB cash rate release Thursday night NZT with an expected hike of 25 points to 4.25% with rhetoric suggesting a halt to the tightening cycle although a hawkish approach is predicted based on stubbornly high inflation.

Current Level: 0.5595 (1.7873)
Resistance: 0.5700 (1.8050)
Support: 0.5540 (1.7545)
Last Weeks Range: 0.5541-0.5678 (1.7612-1.8047)

NZD/GBP Transfer:

The New Zealand Dollar (NZD) reached the outer range low Monday around 0.4790 (2.0880) against the English Pound (GBP) before reversing back to 0.4835 (2.0680) early this morning the kiwi making back some of last week’s losses. UK Retail Sales printed better than expected at 0.7% vs 0.2% forecast for the month of June showing a reflection of “summer sales” in the region. Soft UK Manufacturing has signalled a slowing theme along with Chinese authorities pledging to increase policy supports all supported the kiwi. We don’t have any further data to publish in the pair over the rest of the week suggesting price could continue to bounce around in recent zones.

Current Level: 0.4830 (2.0703)
Resistance: 0.4880 (2.0880)
Support: 0.4790 (2.0490)
Last Weeks Range: 0.4786-0.4880 (2.0492-2.0892)