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The New Zealand Dollar (NZD) gave back last week’s gains Monday sliding to 0.5940 (1.6840) levels in early Tuesday trading after being at 0.6040 (1.6560) late last week. Risk conditions slumped as China covid lockdown protesting spooked markets. With a lack of data publishing of late it’s hard to determine proper direction in the cross with the greenback dictating big picture moves. This week’s Eurozone inflation estimates may give us further clues with predictions the y/y figure should stay above 10.0% forcing the ECB to hike big at their mid Dec meeting. Downside risks in the pair remain.

Current Level: 0.5958 (1.6784)
Resistance: 0.6030 (1.7000)
Support: 0.5880 (1.6580)
Last Weeks Range: 0.5946-0.6037 (1.6563-1.6817)

The English Pound (GBP), New Zealand Dollar (NZD) remains range bound heading into Tuesday reaching 0.5140 (1.9450) Monday before settling around 0.5160 (1.9380). Recent PPI data was revised up by an average of 1.38% after an error was found assisting the GBP slightly together amid a risk off tone which has developed. ECB’s Bailey speaks this week as well as RBNZ’s Orr. We expect more of the same sideways action this week.

Current Level: 0.5152 (1.9410)
Resistance: 1.0920 (1.9600)
Support: 0.5100 (1.9160)
Last Weeks Range: 0.5150-0.5217 (1.9168-1.9414)

The New Zealand Dollar (NZD), Australian Dollar (AUD) is still holding firm around the 0.9260 (1.0787) zone heading into Tuesday with little reason to break out of this zone. NZ Retail Sales was down on expectations at 0.4% from 0.5% q/q weakening the kiwi slightly, overall, the cross seeks directional cues. The kiwi has done well post last week’s cash rate increase to 4.25% but we suspect the AUD may improve this week as the iron ore price continues to advance. Both central bank governors speak this week, the only standouts on the calendar.

Current Level: 0.9265 (1.0790)
Resistance: 0.9345 (1.0900)
Support: 0.9175 (1.0700)
Last Weeks Range: 0.9215-0.9337 (1.0710-1.0851)

The New Zealand Dollar (NZD) has come under pressure as we entered the week, off the back of broad-based risk off tone and heavy buying of the US Dollar (USD) as a result. The cross fell to 0.6160 early Tuesday after posting a fresh high off 0.6290 Thursday. Fears are that the recent rally from 0.5500 levels mid-October may have stalled out developing fresh downside momentum. We would need to see a break below 0.6050 before a decent signal is displayed on the chart. A busy US calendar should keep the pair active over the week with Non-Farm Payroll Friday the key release.

Current Level: 0.6164
Resistance: 0.6450
Support: 0.6080
Last Weeks Range: 0.6085-0.6289

Monday 28/11
12pm, AUD, RBA Gov Lowe Speaks

Wednesday 30/11
2:30am, CAD, GDP m/m
Forecast: 0.10%
Previous: 0.10%
4am, GBP, BOE Gov Bailey Speaks
4am, USD, CB Consumer Confidence
Forecast: 100
Previous: 102.5

Thursday 01/12
2:15am, USD, ADP Non-Farm Employment Change
Forecast: 200K
Previous: 239K
2:30am, USD, Prelim GDP q/q
Forecast: 2.80%
Previous: 2.60%
4am, USD, JOLTS Job Openings
Forecast: 10.36M
Previous: 10.72M
7:30am, USD, Fed Chair Powell Speaks
8:30pm, CHF, CPI m/m
Forecast: 0.10%
Previous: 0.10%

Friday 02/12
2:30am, USD, Core PCE Price Index m/m
Forecast: 0.30%
Previous: 0.50%
4am, USD, ISM Manufacturing PMI
Forecast: 49.8
Previous: 50.2
3:40pm, AUD, RBA Gov Lowe Speaks
5:40pm, NZD, RBNZ Gov Orr Speaks

Saturday 03/12
2:30am, CAD, Employment Change
Forecast: 10.5K
Previous: 108.3K
2:30am, CAD, Unemployment Rate
Forecast: 5.30%
Previous: 5.20%
2:30am, USD, Average Hourly Earnings
Forecast: 0.30%
Previous: 0.40%
2:30am, USD, Non Farm Employment Change
Forecast: 200K
Previous: 261K
2:30am, USD, Unemployment Rate
Forecast: 3.70%
Previous: 3.70%

Key Points:

Global trade fell for the 3rd straight month in September a sure sign of the global economy slowing as high energy prices and rising interest costs knock back business and consumer spending capacity
NZ Retail Sales Q3 +0.4% vs 0.5% expected – prior -2.3%
NZ Consumer Confidence for November prints at 80.7 previous 85.4 as confidence slips further pessimistic
Both Australia and New Zealand’s housing markets continue to tank, Australia’s medium house price fell 1.2% in October while NZ is -10.9% lower year on year.
China daily covid numbers rise to 29,700, the biggest daily number of the pandemic
The British Pound (GBP) is the strongest currency this week while the US Dollar (USD) was the worst performer.

The Australian Dollar (AUD) has regained momentum over the last couple of days against the Euro (EUR) reversing from 0.6435 (1.5540) to reach 0.6500 (1.5380) into Friday. Risk on Aussie buying with equity markets higher, the main driver. Meanwhile French and German manufacturing reads were mixed and still well below key 50.0 around 49.1 and 46.7 confirming continued contraction for businesses. Earlier Governor Lowe spoke of pending higher inflation which will result in lower growth over the coming months. He is concerned about a rise to wages as workers demand better pay. This in turn could lead to higher inflation, something he will be desperately hoping to avoid. Downside risks to the AUD remain.

The current interbank midrate is: AUDEUR 0.6497 EURAUD 1.5391
The interbank range this week has been: AUDEUR 1.5359- 1.5526 EURAUD 0.6440- 0.6510

The British Pound (GBP) has been the best performing currency over the week, leaving the Australian Dollar (AUD) in its wake as it extended last week’s gains through to 0.5555 (1.8000) midweek. A significant 7-day turnaround from 0.5730 (1.7450) levels. UK Producer Managers Index (PMI) came in better than predicted at 46.2 vs 45.7 which is positive but still well under the index 50.0 indicating a contraction for businesses. Further covid lockdowns in China may keep the Aussie under pressure for a while together with Governor Lowe talking of a possible 0.50% rate increase as opposed to 75 points.

The current interbank midrate is: AUDGBP 0.5584 GBPAUD 1.7908
The interbank range this week has been: AUDGBP 0.5555- 0.5625 GBPAUD 1.7776- 1.7999

The Australian Dollar (AUD) has regained the edge on the US Dollar (USD) after last week’s losses reaching 0.6760 this morning after being down around 0.6580 areas. Risk sentiment improved as the greenback came under pressure. Governor Lowe was on the wires saying policy is by no means set in stone and the next few RBA meetings may result in large hikes if needed. Dovish Fed speak hasn’t helped the USD with the Fed pointing to slower rate hikes while they acknowledged “significant uncertainty” on the horizon. While we expect the Aussie to improve further and retest 0.6900 we think the rally theme of late may be close to being exhausted.

The current interbank midrate is: AUDUSD 0.6765
The interbank range this week has been: AUDUSD 0.6583- 0.6777