• Crude oil rallied to its highest price since September in Monday trading reaching 99.40 per barrel with Middle East tensions the source of broad support.
• Russia attacked Ukraine post Trump’s Russia-US energy deal announcement, Zelensky accusing Moscow of violating the energy ceasefire saying they would respond during the winter months If Russia does not agree.
• Fed’s Hammack says more policy tightening is needed to cool energy price demand and AI investment spending.
• The New Zealand Dollar (NZD) sits perilously just above multi year lows of 0.5550 at 0.5610 this morning. A drop below 0.5550 and the liquidity in the NZD becomes very thin giving extreme risks of falls lower.
• Markets are focusing in on tomorrows US CPI release with expectations the number could print significantly higher than analysts are predicting. A hot release could bring a hike at the October Fed meeting.
• The Australian Dollar (AUD) was the best performing currency last week on the main board while the Euro (EUR) is the worst performer.
The New Zealand Dollar (NZD) has steadied between 0.5630 and lows of 0.5580 over the past 10 days against the US Dollar (USD). A heavy risk off tone won’t be helping to drive buyers back into the kiwi, especially given the Fed may end up hiking interest rates from 4.0% to 4.25% on October 29. Further falls towards 0.5000 and the currency enters genuinely concerning liquidity problems. Watch for tomorrow’s US CPI to potentially squeeze the NZD lower.
Current Level: 0.5615
Support: 0.5600
Resistance: 0.5640
Last week's range: 0.5579- 0.5627
The Australian Dollar (AUD) has extended moves higher against the New Zealand Dollar (NZD) posting 1.2460 (0.8025) the 4-week high and a daily close not seen since January 2013. In a risk off mood, markets have sought the AUD ahead of Thursday’s Australian jobs data when published numbers are predicted to come in higher rising the unemployment rate. This could trigger an AUD sell off and re-pricing of the RBA interest rate policy.
Current Level: 0.8035 (1.2435)
Support: 0.8000 (1.2320)
Resistance: 0.8115 (1.2500)
Last week's range: 0.8023- 0.8081 (1.2374- 1.2464)
The bear run trend over the past 8 weeks in the British Pound (GBP), New Zealand Dollar (NZD) cross remains with price clocking a fresh low of 0.4227 (2.3655) yesterday an October 2015 low, around the large swings seen post Brexit in June the same year. The Pound finding support from a hawkish Bank of England (BoE) tone and concerns around further jumps in key inflation indicators reinforcing expectations the BoE will hike to 4.0% on November 6th.
Current Level: 0.4235 (2.3612)
Support: 0.4225 (2.2330)
Resistance: 0.4480 (2.3670)
Last week's range: 0.4225- 0.4248 (2.3541- 2.3665)
Constant tensions involving Iran and renewed fighting in Yemen has turned markets to safe haven products lately leaving the New Zealand Dollar (NZD) a little at the mercy of “risk” depending on incoming data flows. Although the kiwi has improved a little this week to 0.5020 (1.9916) off last week’s low of 0.4980 the currency still fundamentally sits on the back foot. A retest of the zone around 0.4995 (2.0030) is our pick.
Current Level: 0.5010 (1.9960)
Support: 0.4970 (1.9925)
Resistance: 0.5020 (2.0120)
Last week's range: 0.4982- 0.5016 (1.9936- 2.0070)
Lower lows followed by lower highs is the general theme in the Australian Dollar (AUD), US Dollar (USD) cross with price posting 0.6990 early week before retreating lower posting 0.6950 levels on heavy “risk off” sentiment. Massive support in the pair sits at 0.6860 a break through here and this could signal a break of structure for further downside moves. Tomorrow’s US CPI followed by Australian Job numbers will dictate prices, if CPI prints higher the Aussie could be in for a rough ride.
Current Level: 0.6980
Support: 0.6920
Resistance: 0.7040
Last week's range: 0.6931- 0.6990
The Australian Dollar (AUD), British Pound (GBP) cross hasn’t done a lot over the past 10 days pivoting around 0.5270 (1.8970) levels. Hawkish comments from BoE ‘s Greene saying she was concerned about a second round of inflation spikes impacting restrictive policy has boosted the GBP somewhat, however the RBA minutes have also confirmed upside risks to inflation flagging pressures from energy prices. Australian unemployment prints tomorrow and could rise from 4.6%.
Current Level: 0.5267 (1.8986)
Support: 0.5235 (1.8900)
Resistance: 0.5290 (1.9100)
Last week's range: 0.5249- 0.5282 (1.8931- 1.9048)
The Australian Dollar (AUD) is holding modest gains this week against the Euro (EUR) around 0.6240 (1.6030) levels. It sits just above historical lows of oct 2024, a drop below this area and there is very little resistance through to 0.6500 (1.5400) The RBA minutes confirms upside risks remain to inflation and signs of further hikes taking place. Softer house prices and a rise to Australian unemployment tomorrow could certainly change things up. Also, of note escalating Middle East tensions are weighing on risk appetite and AUD demand.
Current Level: 0.6235 (1.6038)
Support: 0.5990 (1.5950)
Resistance: 0.6270 (1.6700)
Last week's range: 0.6177- 0.6238 (1.6030- 1.6188)
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