Directfx admin

Australian Unemployment printed better than predicted at 53,000 vs 20,000 people added to the workforce in March and the unemployment rate ticked lower from 3.6% to 3.5%. Movement in the cross post the release pushed prices off the long-term low at 0.6080 (1.6450) back towards 0.6140 (1.6280) as punters purchased AUD. The ECB is likely to take interest rates to 3.75% at the May 5th meeting, the first of 3 possible hikes this year with hikes also expected in June and July before resting for the remainder of the year. This should give the Euro more topside momentum at least over the coming couple of months.

Current Level: 0.6130 (1.6313)
Resistance: 0.6185 (1.6450)
Support: 0.6080 (1.6170)
Last Weeks Range: 0.6081-0.6150 (1.6258-1.6444)

The Australian Dollar (AUD) regained losses leading into the weekend with news that UK nurses had rejected the pay deal which devalued the British Pound (GBP). Prices came off 0.5350 (1.8700) with the cross closing the week around 0.5410 (1.8490) levels. UK first Quarter CPI published tonight and could give the currency a boost if figures print higher than 10.0% y/y. Forecasting is predicting a 9.8%. The Bank of England are expected to raise rates once more in May, but inflation will no doubt dictate further tightening policy. We wouldn’t discount further support for GBP to 1.9000 (0.5265) over the medium term, the May 2020 low.

Current Level: 0.5414 (1.8470)
Resistance: 0.5475 (1.8700)
Support: 0.5350 (1.8260)
Last Weeks Range: 0.5347-0.5436 (1.8395-1.8699)

US CPI release Friday sent the Australian Dollar (AUD) off 0.6780 back to 0.6700 levels where the cross closed for the week. US Inflation has shrank from 9.1% in June 2022 to 4.8% y/y with energy prices taking the heavy load with falling prices back to pre-Ukraine invasion times. Inflation however is not coming down as fast as analysts would like with forecasts now of rate cuts by the Fed before year end. Chances of a hike in May is still 50/50 with another 25 points in June predicted, this should keep the greenback buoyant for a while. This morning we see 0.6700 levels holding with no major data publishing over the rest of the week. The Aussie may continue to ease lower.

Current Level: 0.6700
Resistance: 0.6780
Support: 0.6620
Last Weeks Range: 0.6617-0.6804

The New Zealand Dollar (NZD) suffered further losses in early Monday trading reaching a fresh low of 0.5640 (1.7740) against the Euro (EUR) an October 2020 low. Lagarde speaking early morning warning changes in the geopolitical world economy is posing problems for the ECB suggesting instability around supply chain and more “multipolarity.” The ECB will hike to 3.75% in May and raise again in June and July before resting policy in the second half of 2023. This will end the more aggressive tightening round in history. Anything back towards 0.5715 (1.7500) looks good buying.

Current Level: 0.5659 (1.7670)
Resistance: 0.5730 (1.8100)
Support: 0.5525 (1.7450)
Last Weeks Range: 0.5643-0.6804

The English Pound (GBP) continues to post gains against the New Zealand Dollar (NZD) despite the RBNZ hiking interest rates last week. Prices have looked comfortable under 2/1 with the cross reaching (0.4965) 2.0130 late last week. The kiwi has been under pressure this week as investors await UK y/y CPI figures tomorrow. Forecast is for inflation to tick lower in the first quarter of 2023 and y/y to slip below 10.0% the first time since August 2022. NZ quarterly inflation also prints this week and should come in around 7.2% where it’s been since Jan 2022. A retest of the long-range low at 0.4926 (2.0300) is the next target on the downside.

Current Level: 0.4998 (2.0008)
Resistance: 0.5040 (2.0140)
Support: 0.4965 (1.9836)
Last Weeks Range: 0.4968-0.5041 (1.9837-2.0126)

The latest round of Australian data of late has impressed markets and improved the Aussie of recent lows. Unemployment data showed a rise in new people entering the workforce and a dip to the unemployment rate now 3.5% vs 3.6% predicted. The upbeat release sent the Aussie higher to 1.0800 (0.9260) and extended these gains into Monday to 1.0850 (0.9215). NZ Manufacturing data wasn’t so pretty with the sector struggling with a decline in production in March putting the kiwi under pressure. Down from February’s number and well below the long-term average of 53.0 . To put this into perspective this is the lowest read since NZ was put into lockdown in August 2021. NZ quarterly CPI releases Thursday and is predicted to remain stubbornly high around 7.2%.

Current Level: 0.9230 (1.0824)
Resistance: 0.9275 (1.0870)
Support: 0.9200 (1.0780)
Last Weeks Range: 0.9250-0.9430 (1.0604-1.0810)

The Federal Reserve has turned a corner in their fight against inflation with the latest release confirming a trend in the right direction is in play as CPI prints at 5.0% y/y in March the lowest level since May 2021. The US Dollar (USD) rallied into the weekly close against the New Zealand Dollar (NZD) to 0.6200 coming off 0.6300 midweek. The Fed will most likely hike rates at their May meeting and again in June before starting to vigorously cut rates prior to year-end. NY’s Fed business condition index spiked in April, a gauge of manufacturing activity, the first rise in 5 months indicating improved conditions. It should be a reasonably quiet week with just Fed members Waller and Harker speaking Friday. Those clients buying USD should consider at current levels.

Current Level: 0.6185
Resistance: 0.6350
Support: 0.6100
Last Weeks Range: 0.6181-0.6314

Market Overview

• US equities rally into the close trading back to recent highs
• Fed’s Barkin said he needs inflation to settle back to its 2-3% target before rate rises are paused.
• Lagarde on the wires saying once the inflation objective has been achieved we can discuss changing the 2.0% inflation target.
• The International Monetary Fund sees growth at 2.8% in 2023 and 3.0% for 2024, this is down slightly on January’s forecast. Global growth is seen at 3.0% in 2028, this is the worst mid-term forecast since 1990.
• SpaceX Starship launch has been delayed because of a valve freezing issue. No reschedule of the launch has been set.
• China’s defence minister Li Shangfu has again confirmed his support to Russia in its invasion of Ukraine. China is willing to help strengthen military efforts with Russia.
• NY State Manufacturing rebounded in April- the Index printing 10.8 compared to -17.7, a good barometer of economic growth.
• Housing demand in the US rises for the fourth straight month in April.
• The Australian Dollar (AUD) was the strongest currency last week with the New Zealand Dollar (NZD) and the Japanese Yen (JPY) the weakest. Read more

Tuesday April 18
12:30am USD Empire State Manufacturing Index
Forecast: -17.7
Previous: -24.6
3:00am EUR ECB President Lagarde Speaks
1:30pm AUD Monetary Policy Meeting Minutes
2:00pm CNY GDP q/y
Forecast: 3.90%
Previous: 2.90%
6:00pm GBP Claimant Count Change
Forecast: 10.2K
Previous: -11.2K
6:00pm GBP Average Earnings Index 3m/y
Forecast: 5.10%
Previous: 5.70%
9:00pm EUR German ZEW Economic Sentiment
Forecast: 15.5
Previous: 13 Read more

The Australian Dollar (AUD) came off 1.0610 (0.9425) late last week to rally back to 1.0775 (0.9280) this morning. Weirdly upside moves in the New Zealand Dollar (NZD) post a 50-point hike by the RBNZ came to a screaming Halt. Investors preferring to buy the AUD with commodities and precious metal prices strengthening. Adding to the confusion has been talk by the RBA suggesting decent odds of a cut to rates by the end of the year. Australian jobs numbers print later today with all eyes on the data and how this may affect the RBA’s recent mood to pause tightening plans. Of note Australian consumer confidence reached its highest level since June 2022 and China and Australia have reached a deal which will possibly see tariffs removed on exports of barley implemented in 2020. On the chart we see price pushing above the 100-day moving average line suggesting further upside for the AUD may continue.

The current interbank midrate is: NZDAUD 0.9278 AUDNZD 1.0771
The interbank range this week has been: NZDAUD 0.9259- 0.9407 AUDNZD 1.0630- 1.0800