AUD/USD Transfer:

Risk gone Monday improved with most high-risk products making a comeback. The Australian Dollar (AUD) recovered to 0.6700 levels from 0.6635’s open against the US Dollar (USD). Aussie was hit particularly hard ending the week at lows from a 200-point upswing earlier in the week. Fallout from the US banking sector and US inflation expectations weighed heavily. Also, of note metal prices and worry in China with efficiency of the economy reopening have dulled global sentiment. The long-term double bottom base at 0.6570 has held up of late with setbacks being well supported here. We await US Retail Sales and Australian Jobs data this week.

Current Level: 0.6708
Resistance: 0.6800
Support: 0.6600
Last Weeks Range: 0.6636 (0.6812)

NZD/EUR Transfer:

The recent rally in the New Zealand Dollar (NZD) from 0.5530 (1.8080) to 0.5800 (1.7230) came to an end Friday against the Euro (EUR) reversing back to 0.5700 (1.7550) into early Tuesday. The risk off tone may be the start of a trend reversal as the pair starts to track back to the long-term April low of 0.5530 (1.8080). Certainly, price reflects recent discussion around the EU growing at a faster pace in 2023 than first thought supported by energy prices easing and a strong labour market. The EU said the quarterly GDP is expected to grow in the Eurozone 1.1% in 2023 much higher than the 0.9% increase forecast back in February.

Current Level: 0.5745 (1.7406)
Resistance: 0.5810 (1.7500)
Support: 0.5715 (1.7220)
Last Weeks Range: 0.5696-0.5814 (1.7198-1.7554)

NZD/GBP Transfer:

After the massive “about turn” from last week’s 1.9700 level the English Pound (GBP), New Zealand Dollar (NZD) has settled around 0.5000 (2.000) Monday. The recent strength in the GBP looks to have put it into over territory with the UK facing a recession. The economic downturn predicted in the second half of 2023 could weigh on sentiment and put large downward pressures on the Pound. The New Zealand “wellbeing” Budget is released Thursday at 2.00pm. We shouldn’t get the massive currency moves of old happening around the publication, but we may still see a little volatility. We expect the kiwi to push back this week.

Current Level: 0.4991 (2.0036)
Resistance: 0.5050 (2.0140)
Support: 0.4965 (1.9800)
Last Weeks Range: 0.4962-0.5053 (1.9788-2.0153)

NZD/AUD Transfer:

The Australian Dollar (AUD) extended gains Monday to 1.0760 (0.9295) from last week’s run from 1.0600 (0.9435) breaking above key moving average support lines. Long term resistance at 0.9435 (1.0600) held Friday as we suggested, the double top formation of Dec 2022. This week on the economic docket we have Australian employment data and the NZ budget. Downside bias remains in the cross unless we see improvement in metal prices and the Chinese narrative improve.

Current Level: 0.9316 (1.0728)
Resistance: 0.9430 (1.0860)
Support: 0.9210 (1.0600)
Last Weeks Range: 0.9310-0.9431 (1.0603-1.0740)

NZD/USD Transfer:

The New Zealand Government has already said “don’t expect too much from this year’s annual budget”. The economy is close to stalling with inflation well over cooked. With Cyclone Gabrielle devastating parts of the country with massive clean-up and rebuilding cost required, it all leads to a deficit leading into the 2025 budget year. Risk off conditions rallied the greenback Thursday with more stress around the banking sector. US inflation expectations remain high with Fed member Bowman supporting further hikes, saying recently that recent CPI and employment reports have not provided consistent evidence that inflation is on a downward trajectory. NZ inflation expectations have fallen to 2.79% in the first Q down from 3.3% in the 4th quarter, the first time the data has been below 3.0% since 2021, this doesn’t mean the RBNZ are out of the woods just yet. Upside bias in the kiwi looks limited.

Current Level: 0.6252
Resistance: 0.6360
Support: 0.6100
Last Weeks Range: 0.6180-0.6382

FX Update: Risk Improves

Market Overview

• NZ Net migration continues to improve from February 2022’s low of -19,000, net migration in March was a healthy 65,000.
• Currency crosses are up overnight after the strong US Dollar rally from Friday.
• G7 countries plan to ban the restart of Russia’s gas imports on the same routes where they previously cut supplies.
• Talk of the Fed has finished hiking interest rates may lead equity markets higher.
• Westpac are suggesting the RBNZ will raise rates to 6.0% and retain until mid-2024.
• Argentina raises cash rate 600 points to 97%
• Canada April housing starts 262k vs 220k predicted with immigration strong and builders going back to work.
• Japanese machine Rodgers down 14.4% y/y, a small improvement on the earlier 15.2% slide.
• The US Dollar (USD) has been the best performer the past week while the New Zealand Dollar (NZD) has been the worst performing currency. Read more

Calendar of Economic Releases

Tuesday May 16
12:30am USD Empire State Manufacturing Index
Forecast: -3.7
Previous: 10.8
1:30pm AUD Monetary Policy Meeting Minutes
6:00pm GBP Claimant Count Change
Forecast: 31.2K
Previous: 28.2K
6:00pm GBP Average Earnings Index 3m/y
Forecast: 5.80%
Previous: 5.90%
6:00pm 9:00pm EUR German ZEW Economic Sentiment
Forecast: -5.4
Previous: 4.1

Wednesday May 17
12:30am CAD CPI m/m
Forecast: 0.50%
Previous: 0.50%
12:30am CAD Median CPI y/y
Forecast: 4.30%
Previous: 4.60%
12:30am CAD Trimmed CPI y/y
Forecast: 4.10%
Previous: 4.40%
12:30am CAD Common CPI y/y
Forecast: 5.50%
Previous: 5.90%
12:30am USD Core Retail Sales m/m
Forecast: 0.50%
Previous: -0.80%
12:30am USD Retail Sales m/m
Forecast: 0.80%
Previous: -1.00%
2:00am EUR ECB President Lagarde Speaks
1:30pm AUD Wage Price Index q/q
Forecast: 0.90%
Previous: 0.80%
9:50pm GBP BOE Gov Bailey Speaks Read more

AUD/USD Transfer:

The Australian Dollar (AUD) bounced off 0.6800 resistance late yesterday against the US Dollar (USD) falling back to 0.6700 in early morning trading. Risk dived as equity markets all recorded losses, the Aussie running into selling pressures. Dropping metal prices and weak Chinese data hasn’t helped. US CPI printed at 4.9% compared to 5.0% expected almost cementing chances the Federal Reserve won’t hike rates again in this cycle. This is the lowest inflation read since April 2021. Will disinflation continue is the question with around 70 points of rate cuts priced in this year’s forecast. Setbacks to 0.6570 will be well supported in the long term along with action above 0.6800 looking difficult. US Retail Sales prints next week, our focus on the economic docket.

The current interbank midrate is: AUDUSD 0.6699
The interbank range this week has been: AUDUSD 0.6687- 0.6817

NZD/GBP Transfer:

The Bank of England monetary policy report revealed a hike to 4.50% overnight, the central bank hiking 25 points as widely predicted the 12th consecutive time the central bank has raised. It was a less dovish report from members who predict a better forecast ahead for the UK economy. Bank of England’s Bailey said future rate moves were confidential with no hints as to future directional steer. The bank expects the economy to grow nearly 1% through to the second quarter 2026- it’s not a strong forecast but it’s less weak. Not a lot of movement in the cross post the rate decision, the pair pivoting around 0.5045 (1.9820) areas.

The current interbank midrate is: NZDGBP 0.5033 GBPNZD 1.9868
The interbank range this week has been: NZDGBP 0.4983- 0.5053 GBPNZD 1.9788- 2.0065

NZD/USD Transfer:

The New Zealand Dollar (NZD) made it through to 0.6800 last night the highest level since early February but was unable to hold here falling back against the US Dollar (USD) to 0.6300 this morning as equity prices closed lower. The odds of the Federal Reserve hiking their interest rate now is basically nil which has pushed up the greenback. US CPI for April showed 4.9% year on year pretty much creating a pause to rates a sure thing. This marks the lowest inflation since April 2021 printing below expectation of 5.0%. With forecasting of around 70 points of cuts to take place this year, this may be too much based on a cooling labour market. Also of consideration is the return of the Chinese market post Covid and the upturn of commodity prices which could send equity markets souring. This in turn means that interest rates would stay higher for longer. This would also support the greenback. Next week’s NZ annual “Wellbeing” Budget should move the kiwi.

The current interbank midrate is: NZDUSD 0.6295
The interbank range this week has been: NZDUSD 0.6288- 0.6383