NZD/GBP Transfer:

After weeks of big moves in the British Pound (GBP), New Zealand Dollar (NZD) this week has seen relatively speaking mostly sideways play. Perhaps the GBP has held up slightly better from an upbeat UK budget. The Pound dipped to a low of 1.9415 before settling early around 1.9560 (0.5115) areas. UK’s Hunt has said the UK will not enter a recession this year as the outlook slowly improves and “inflation halves” – he predicts inflation to fall from 10.7% to 2.9% by the end of this year. The New Zealand Economy contracted more than expected in the fourth quarter of 2022 with figures reflecting a growth downturn of -0.6% compared to the forecast figure of -0.2%, this marks part 1 of entering a formal recession with two quarters in a row required. With the RBNZ interest rate at 4.75% we may only see a further 25-point hike to 5.0% at the 4th April meeting, this is based on earlier forecasting of a 5.5% peak in the cash rate mid this year. A retest of 0.5075 (1.9700) is our pick in the medium term.

The current interbank midrate is: NZDGBP 0.5109 GBPNZD 1.9573
The interbank range this week has been: NZDGBP 0.5087- 0.5150 GBPNZD 1.9415- 1.9658

AUD/USD Transfer:

The Australian Dollar (AUD) entered Friday around the 0.6650 region after dropping below 0.6600 Thursday as risk mood deteriorated, the fallout from two US bank closures impacting. Australian employment data beat expectations in February the jobless rate underpinning the modest push higher. The Unemployment Rate dropped to 3.6% from 3.5% marking the lowest rate since the 1970’s. Speculation on how much the Fed will raise rates at next week’s meeting is hotting up with punters divided on a 25- or 50-point hike. US data of late has been positive although inflation is still stubbornly high after easing from 6.4% to 6.0% during the week- good- but not good enough. The forecast to the end of January was for a 25-point hike, now this is 50 points – some may say not justified if we consider the recent two US bank closures. The hellbent approach to destroying high inflation may have the Fed seeing too much “red”. The downward spiral from 0.7100 numbers in early February looks to continue its bear run. Support seen at 0.6520, if the Fed raises 50 points next week this may come into view.

The current interbank midrate is: AUDUSD 0.6655
The interbank range this week has been: AUDUSD 0.6588- 0.6715

NZD/AUD Transfer:

The New Zealand Dollar (NZD) came off a fresh 11 week high of 0.9375 (1.0670) midweek against the Australian Dollar (AUD) snapping lower on worse than expected 4th quarter GDP. Expectations of a -0.2% number was monstered by a surprise -0.6% figure sending the kiwi retreating across the board. The cross was soon at 0.9260 (1.0800) assisted by an improved Australian Jobs number print. Unemployment dropped from 3.6% to 3.5% highlighting the RBA still has a way to go to suppress high inflation and strong economic growth. Chances of an interest rate rise from 3.6% now highly likely at the 4th April policy meeting. The long range forecast of the cross heading into 2024 looks now to be poised to possibly fall into the high 80’s sooner than expected.

The current interbank midrate is: NZDAUD 0.9301 AUDNZD 1.0741
The interbank range this week has been: NZDAUD 0.9260- 0.9369 AUDNZD 1.0673- 1.0798

NZD/USD Transfer:

The New Zealand Economy contracted more than expected in the fourth quarter of 2022. Figures shown reflecting a downturn in growth of -0.6% compared to the forecast figure of -0.2%. The big question to come out of this release is whether the RBNZ will continue to hike rates to 5.5% or halt. We predict another 25 points to 5.00% is all that’s needed in this policy tightening cycle. Let’s be honest here- New Zealanders are already hurting. The RBNZ always said they would continue to hike into a recession, and we are halfway there. Of note the original calculation put GDP at -1.2% but with the new seasonally adjusted calculation method it wasn’t as worse. Of the 16 industries 9 experienced declines in activity with manufacturing down 1.9%, household spending has been flat, but expectations are for this to worsen over the coming months. The kiwi dived around 80 points on the release but recovered somewhat into last night’s US market open and hovers around a steady 0.6170 this morning.

The current interbank midrate is: NZDUSD 0.6191
The interbank range this week has been: NZDUSD 0.6138- 0.6263

Key Points this Week

Key Points this week:
Happy St. Patrick’s Day
US Bank SVB- Silicon Valley Bank was forced to close last weekend by regulators over concerns of solvency. SVB is the 16th largest US bank with 210B in assets. Following this was the closure of another US bank closure Signature Bank also based on liquidity issues, this bank’s financial position however was not as bad as SVB.
US Inflation cooled in February to 6.0% down from 6.4% y/y but remains stubbornly high. The challenge for the Federal Reserve is how to best slow the economy.
NZ National house prices were lower in the month of February down 13.9% y/y to 762,000
New Zealand GDP ending Dec 2022 came in light at -0.6% compared to -0.2% predicted.
US Retail Sales fell 0.1% in February to 0.4% from 0.3% offering another reason for the Fed to pause hikes.
ECB members raised the interest rate by 50 points last night to 3.50% pushing borrowing costs to the highest levels since 2008.
Predictions are for 2023 China GDP forecast to rise from 5.5% to 6.0%.
The Japanese Yen (JPY) has been the best performing currency this week while the Euro (EUR) has been the worst performer

This Weeks Key Points:

Key Points:

The Federal Reserve remains hawkish- early 2023 economic activity shows moderate expansion.
Russia has fired 81 missiles across Ukraine marking the biggest attack since January.
A year ago, yesterday Crude prices closed at $123.00 which was the highest going back to 2008. From this peak it is now down 40% to circa 76.00
Retail Sales figures for February are unchanged from January’s number- a good indicator of economic activity.
US Jobs data comes in light at 211k compared to 195k weakening the greenback.
The Bank of Canada held rates at 4.50% overnight the first pause in 9 meetings but will continue with its quantitative tightening, inflation is starting to come down based largely on lower energy costs.
British House prices decline to a 14 year low.
Japan’s GDP came in lower at 0.1% from 0.6% for the fourth quarter 2022 as domestic demand shrinks.
The US Dollar (USD) has been the best performing currency so far in March while the Australian Dollar (AUD) has been the weakest.

AUD/GBP Transfer:

It’s been one way traffic this week again for the British Pound (GBP) outperforming the Australian Dollar (AUD). The pair started the week around 0.5620 (1.7800) falling into Friday to 0.5525 (1.8100). A weekly close below 0.5515 (1.8135) which isn’t far away and the cross will travel into mid 2022 levels. The RBA pushed interest rates higher Tuesday to 3.6% from 3.35% saying they were nearing the end of their tightening cycle, we are calling this a dovish hike. We may only see 1 hike at the next meeting, the Aussie was sold off post the release leveraged further lower based on equity and risk products taking hits.

The current interbank midrate is: AUDGBP 0.5536 GBPAUD 1.8063
The interbank range this week has been: AUDGBP 0.5537- 0.5628 GBPAUD 1.7766- 1.8058

AUD/USD Transfer:

The Australian Dollar (AUD) retreated to a new November 2022 low of 0.6565 this week against the US Dollar (USD) plunging from around 0.6750 earlier in the week. The Reserve Bank of Australia raised rates from 3.35% to 3.60% as expected with Governor Lowe suggesting they are close to coming to a close on their tightening policy and pausing on further hikes. However more hikes will be needed over the coming months, perhaps only the one instead of two to ensure inflation does indeed start to track lower. In line with this dovish hike were comments from Fed chairman Powell suggesting the opposite may be on the horizon with further hikes above recent estimates and a new upper range of 5.5% to 5.75% possible. This mood should keep the cross on the down slopes for a while until central bank speak changes.

The current interbank midrate is: AUDUSD 0.6600
The interbank range this week has been: AUDUSD 0.6566- 0.6768

NZD/GBP Transfer:

The New Zealand Dollar (NZD) surged lower early Friday from 0.5160 (1.9380) to 0.5120 (1.9535) against the British Pound (GBP) extending previous weeks of losses. A breakout through 0.5085 (1.9670) looks to be the next long range target, the 1 November low, through here and the 100 day Moving Average could signal further downside for the kiwi. The UK economy stalled in the fourth quarter of 2022 making next week’s m/m GDP forecast all the more important. They will be doing well to avoid a recession in 2023 with the outlook still weak.

The current interbank midrate is: NZDGBP 0.5133 GBPNZD 1.9481
The interbank range this week has been: NZDGBP 0.5134- 0.5182 GBPNZD 1.9295- 1.9475