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Risk off currency mood of late has seen the English Pound (GBP) extend moves against the New Zealand Dollar (NZD) into Thursday trading, the pair posting a fresh low of 2.0390 (0.4905) the February 2022 low. The Bank of England’s Pill was on the wires saying British people need to accept they are poorer rather than trying to claw back living standards, went down like a cup of cold sick weakening the GBP for a while. With very little data published this week the main driver has been risk; next week’s NZ unemployment rate is our focus looking forward. A break below 0.4870 (2.0530) will send us into 3-year low areas on the big picture downtrend.

The current interbank midrate is: NZDGBP 0.4905 GBPNZD 2.0387
The interbank range this week has been: NZDGBP 0.4903- 0.4964 GBPNZD 2.0144- 2.0392

The recent stall in the run up to 0.6500 is well behind us now with most of the action of late all about US Dollar (USD) strength and “risk” of market sentiment taking down the New Zealand Dollar (NZD). Recent US data in the form of New Home Sales and Core Goods Orders both printed above expectations helped to squeeze the kiwi lower to 0.6120 this morning. Last week’s NZ inflation data came in soft, repricing dovish RBNZ expectations which should keep the kiwi on a downward trajectory. Key support sits at 0.6050 and 0.6000, below here and the cross could carve out a broader long-term bear run.

The current interbank midrate is: NZDUSD 0.6119
The interbank range this week has been: NZDUSD 0.6110- 0.6186

The New Zealand Dollar (NZD) regained the edge Monday after dropping to 0.9150 (1.0930) Friday against the Australian Dollar (AUD) pushing back to 0.9295 (1.0760) in early morning trading. Australian inflation looks to have peaked in late 2022 with yesterday’s data showing the souring rate of living costs could now be correcting lower. CPI first quarter 2023 came in at 7.0% down from 7.8% from a year ago. The RBA will no doubt be content to leave rates on hold at next week’s meeting. That being said, the consumer confidence index ticked below 80.0 the lowest level since late 2019 highlighting ongoing concerns. With the RBNZ predicted to raise rates to 5.5% again in May following the 50 point hike on April 5th we could see currency/central bank divergence kick in again and a stronger NZD. The 50% retracement Fibonacci resistance at 0.9295 (1.0760) has been hit with upside bias in the AUD over the last couple of hours.

The current interbank midrate is: NZDAUD 0.9263 AUDNZD 1.0791
The interbank range this week has been: NZDAUD 1.0758- 1.0906 AUDNZD 0.9169- 0.9295

Tuesday April 25th
All Day NZD Bank Holiday
All Day AUD Bank Holiday
All Day EUR Italian Bank Holiday

Wednesday April 26th
2:00am USD CB Consumer Confidence
Forecast: 104.1
Previous: 104.2
1:30pm AUD CPI q/q
Forecast: 1.30%
Previous: 1.90%
1:30pm AUD CPI y/y
Forecast: 6.60%
Previous: 6.80%
1:30pm AUD Trimmed Mean CPI q/q
Forecast: 1.40%
Previous: 1.70% Read more

The Australian Dollar (AUD) has recovered losses post last week’s CPI slide to 0.6700 picking up bids this week on its way to 0.6760 early this morning. The US Dollar index slipping under 102.0 from 106.0 supported originally by a hawkish Fed – however the run has been unsustainable. Interest rate differentials remain bullish for the greenback with a further hike expected at the 4th May meeting. There are signs that demand for labour is cooling, and inflation is expected to come down to around 3.5% by year end. US Manufacturing prints tonight amid several Fed members speaking. Looking ahead we have Aussie CPI Wednesday, next week’s economic highlight. We may see a retest of 0.6780 prior to the weekly close as the AUD is squeezed.

The current interbank midrate is: AUDUSD 0.6739
The interbank range this week has been: AUDUSD 0.6680- 0.6770

The British Pound (GBP) rallied again this week pushing the price to 2.0220 (0.4945) a new October 2022 level against the New Zealand Dollar (NZD) as inflation data published. NZ CPI came in lower year on year at 6.7% down from 7.2% sinking the kiwi as investors were disappointed by the news. The news supports the theory that the RBNZ may have just one more hike planned, possibly in May before halting policy. UK inflation fell less than expected in March holding at 10.1% as energy and food prices remain elevated. Although this remains close to the 41 years high of 11.1% inflation is predicted to drop away towards the end of this year. Friday trading sees the cross just off long-term lows but looking comfortable under 2/1

The current interbank midrate is: NZDGBP 0.4959 GBPNZD 2.0165
The interbank range this week has been: NZDGBP 0.4949- 0.5008 GBPNZD 1.9968- 2.0206

NZ CPI shrank to 6.7% year on year yesterday, with the March quarterly figure publishing at 1.2% down from fourth quarter numbers of 1.7%. Clearly this is good news for the NZ economy, but not good enough, with inflation still elevated well beyond what the RBNZ feel is comfortable. Prices rose at a slower pace for housing and utilities 7.1% vs 8.0%, transport 3.7% vs 7.4% meanwhile prices rose for food 11.3% vs 10.7% and alcohol and tobacco 7.4% vs 5.9%. The New Zealand Dollar (NZD) was marked down following the publication falling away across the main board of currencies a quarter of a percent. The NZD/USD cross dropped from around 0.6200 levels towards 0.6150, early Friday it was back around 0.6175. Fed member Williams spoke yesterday supporting the argument for another rate rise saying they will use monetary tools to reduce inflation. Downside bias remains for the kiwi.

The current interbank midrate is: NZDUSD 0.6169
The interbank range this week has been: NZDUSD 0.6157- 0.6224

As New Zealand economy is on the verge of a recession this has put the NZD under significant pressure across the main currency board including the Australian Dollar (AUD) of late. As the two central bank’s policy diverge- the RBNZ aggressively hiking and the RBA holding policy on April 4th we have seen the NZD/AUD cross come off 0.9440 (1.0595) to 0.9155 (1.0922) today. The toll on consumers has been evident while across the Tasman the mood is somewhat brighter. Stronger than expected Chinese GDP and an overall better optimistic economic tone have helped push the Aussie higher together with better commodity prices such as iron ore which has gone from 113.00 this week to 121.50 per tonne. NZ inflation for the first quarter of 2023 came in better than predicted at 1.2% from 1.7% consensus changing the year-on-year inflation number to 6.7% from 7.2%. The kiwi could remain on the backfoot ahead of next week’s Aussie inflation release Wednesday.

The current interbank midrate is: NZDAUD 0.9153 AUDNZD 1.0915
The interbank range this week has been: NZDAUD 0.9157- 0.9283 AUDNZD 1.0772- 1.0920

UK inflation dropped less than we were expecting yesterday from 10.4% to 10.1% year on year in the March quarter after 9.8% was predicted. It has remained above 10% for the seventh consecutive period now going back to July 2022. Pressures came from food and alcohol 19.1 vs 18.0 in February, recreation and goods and services. The cost of borrowing and utilities have also risen from 26.6% from 26.1% the previous month. These rises indicate the worst cost of living squeeze in a generation. We should see the Bank of England raise rates accordingly with an expected 3 more hikes this year. The pair sits around 0.5420 (1.8440) in this morning’s trading with further upside in the Pound expected in the medium term.

The current interbank midrate is: AUDGBP 0.5417 GBPAUD 1.8460
The interbank range this week has been: AUDGBP 0.5387- 0.5435 GBPAUD 1.8396- 1.8563

Australian Treasurer Chalmers announces the biggest reform in the Reserve Bank of Australia since the 90’s. The changes will see the RBA adopt a committee structure which closely follows systems at the Bank of Canada and the Bank of England and how they set interest rates. The number of policy meetings held per year will drop from 11 to 8
New Zealand Housing data published this week showed a slight pickup in the medium national house price, up from 762,000 to 775,000 in March. Days to sell improved from 60 days to 45. We expect this to drift up over the coming months as consumers “wait and see”.
Canadian Inflation slowed from 5.2% to a 19-month low to 4.3% year on year in March. This was supported by the recent central bank policy pause.
Fed’s Bullard says he doesn’t see a recession developing in the US economy in the next 6 months.
UK Inflation surprised yesterday when figures for March showed an increase in CPI from February’s 9.8% to 10.1% as food and energy prices remain elevated.
Morgan Stanley’s CEO Gorman says the Fed is not yet done with another two hikes planned.
ECB’s Schnabel said Wednesday underlying inflation remains ‘sticky’.
Inflation is still too high according to Fed officials, they need to see lower prices, it will likely take 2 years to reach their target of 2.0%
The Euro (EUR) has been the strongest performer during the month of April with the New Zealand Dollar (NZD) and the Japanese Yen (JPY) the weakest.