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USD weakness over the past day or so has seen the Australian Dollar (AUD) push up from its recent low of 0.6460 back to 0.6580 into Friday trading. Buyers of the greenback should be considering these levels to buy as the Australian Dollar (AUD) gathers considerable pace on the downside. However, for now the Aussie is holding up with a turn of market risks sentiment and positive data publishing in the form of Construction and Housing. Fed officials have indicated they will most likely hold interest rates steady at the June meeting before raising them again last in the year. This gives officials time to study the effects on the economy from the past 10 consecutive hikes. We expect the bearish continuation in the cross to continue, a break about 0.6600 looks unlikely.

The current interbank midrate is: AUDUSD 0.6375
The interbank range this week has been: AUDUSD 0.6457- 0.6583

The lack of economic data over the week has seen the English Pound (GBP) extend its rally against the New Zealand Dollar (NZD) to 2.0730 (0.4825) this morning. Monetary policy differentials are influencing kiwi moves of late when we consider the Bank of England eyeing up to hike rates again over the coming months. We said this would strengthen the GBP further which is what has unfolded over the week. The docket is thin again next week, central bank action should continue to be the main driver.

The current interbank midrate is: NZDGBP 0.4836 GBPNZD 2.0678
The interbank range this week has been: NZDGBP 0.4822- 0.4914 GBPNZD 2.0347- 2.0737

Risk markets improved overnight taking the New Zealand Dollar (NZD) off recent lows around 0.5980 to 0.6070 early Friday. US Equities put in a solid performance in overnight trading, the Nasdaq up over 1.2% as the greenback was sold off. The recent shift in the RBNZ policy continues to weigh on the kiwi fundamentals. We suspect we could see another improvement in the Non-Farm Payroll release tomorrow morning. US Manufacturing has indicated the industry is hiring new people with employment growth improving. Also, this week’s Services report showed job creations are the strongest it’s been in 10 months. ADP Non-Farm release was also positive overnight 278k vs 173k offering a clue as to what we can expect. Usually, a better-than-expected NFP release is good for the USD.

The current interbank midrate is: NZDUSD 0.6058
The interbank range this week has been: NZDUSD 0.5983- 0.6076

The Australian Dollar (AUD) continues its advancement against the New Zealand Dollar (NZD) extending gains into the end of the week to 1.0850 (0.9220). A combination of RBNZ dovish views affecting NZD flows and solid data coming out of Australia has seen prices reach 6-week lows. Higher costs in rents, recreation and food have driven up the monthly Australian CPI again to 6.8% from 6.3% y/y. This confirms the ongoing inflationary pressures economy wide and will be disappointing for the RBA as they try to strengthen the case for easing policy. With price pushing past the 100-day moving average at 1.0800 (0.9260) we expect further AUD momentum through to next week’s RBA Tuesday.

The current interbank midrate is: NZDAUD 0.9211 AUDNZD 1.0850
The interbank range this week has been: NZDAUD 0.9215- 0.9307 AUDNZD 1.0744- 1.0851

Key Points:

European Inflation eased from 7.0% to 6.1% year on year.
Australian House prices rose in May, the biggest move since November 2021.
The Federal Reserve awaits crucial Non-Farm Payroll release for ongoing policy guidance.
US ISM May Manufacturing 46.9 vs 47.0 expected.
Chinese Manufacturing Caixin index reported its highest level since June 2022 even though the gauge remained weaker than supply.
Canadian Manufacturing 49.0 vs 50.2 prior, based on softer new orders and less output.
Rate hikes are starting to have an impact on inflation- ECB’s Villeroy. Meanwhile Lagarde commented that the ECB needs to continue with hiking and is confident they can return inflation back to their 2% target over the following months.
The US Dollar (USD) has been the worst performer this week, the best performer has been the Japanese Yen (JPY).

The long-term bear trend resumed last week in the Australian Dollar (AUD), Euro (EUR) cross with price reaching 0.6060 (1.6500) a 3-week low. Risk sentiment improved Monday after US Debt Ceiling negotiations came to an agreement pushing the Aussie to 0.6120 (1.6370) On the docket this week we have Australian CPI y/y Wednesday, expected to print around 6.4% for the month of April, up from March’s 6.3% a spike in the figure may give the AUD upside bias.

Current Level: 0.6099 (1.6396)
Resistance: 0.6175 (1.6800)
Support: 0.5950 (1.6190)
Last Weeks Range: 0.6055-0.6164 (1.6222-1.6515)

The Australian Dollar narrowly avoided slipping past the long-term level of 0.5265 (1.9000) late in the week against the British Pound (GBP). The risk averse mood weakened the Aussie along with a UK Retail Sales surprise print. Retail Sales came in at 0.5% instead of the predicted 0.3% for the month of April bringing back buyers to the GBP. The UK’s economy is on the cusp of falling into an extended period of sluggishness as high interest rates affect business investment, as rates are predicted to stay higher for longer. It could be a long time before the BoE achieves their 2.0% inflation target. We think 0.5260 (1.9020) low of Jan 2022 should hold for now.

Current Level: 0.5288 (1.8910)
Resistance: 0.5415 (1.9150)
Support: 0.5220 (1.8470)
Last Weeks Range: 0.5270-0.5359 (1.8658-1.8975)

US markets were closed Monday for Memorial Day making for a slow day across currencies. We did get a little upside off the weekly open as risk improved after US debt ceiling negotiations concluded positively between Biden and McCarthy with an agreement of sorts. The US Dollar (USD) slipped as the Australian Dollar (AUD) improved to 0.6550 in thin trading conditions. US Manufacturing data prints Friday along with the ever-important US Non-Farm Payroll and unemployment rate. We expect another decent Non-Farm figure following 13 months of positive numbers. Every publication going back to early 2022 has sent the AUD higher post release. Something to keep in mind. On the chart we don’t see much support for the AUD as it heads into the abyss eying 0.6200.

Current Level: 0.6531
Resistance: 0.6800
Support: 0.6500
Last Weeks Range: 0.6489-0.6667

The New Zealand Dollar (NZD) fell from its 10-week high of 0.5825 (1.7170) mid last week to close at 0.5640 (1.7730) against the Euro (EUR). US debt ceiling news has been positive Monday after a deal was reached sending the greenback lower and risk currencies higher, the kiwi making small gains into Tuesday to 0.5660 (1.7660). Setbacks in the Euro have been well supported of late with decent data publishing. German prelim CPI releases tomorrow and is predicted to be around 0.2% after contracting -0.3% in the first quarter of 2023. With potentially no further hiking on the radar from the RBNZ we may see the NZD weaken further towards the yearly low at 0.5530 (1.8080)

Current Level: 0.5644 (1.7717)
Resistance: 0.5715 (1.8070)
Support: 0.5535 (1.7500)
Last Weeks Range: 0.5636-0.5826 (1.7163-1.7741)

The New Zealand Dollar (NZD) has found itself perilously close to the multi-year low of 0.4880 (2.0500) as we head into the week. Spanked last week by news that the RBNZ may have finished their tightening policy the news took the kiwi from 0.5040 (1.9850) to 0.4900 (2.0400) where it has managed to consolidate. Risk sentiment improved off the open as news that the US President had negotiated a new debt ceiling, the NZD making small gains into Tuesday as the greenback was sold. With the Bank of England setting up to hike rates again 25 points in June, August, and September we expect the Pound to continue to strengthen.

Current Level: 0.4895 (2.0429)
Resistance: 0.5060 (2.0520)
Support: 0.4875 (1.9770)
Last Weeks Range: 0.4894-0.5064 (1.9746-2.0431)