It's highly likely the RBNZ will keep its interest rate unchanged when they meet this afternoon. Given the situation and uncertainty in the Middle East and shock to oil prices and the potential impacts to inflation we will see a "hold" at 2.25% in this round. With headline inflation expected to rise to 3.5% it will be a balancing act with timing to ensure inflation doesn't blow out. Raising rates to soon and we could see stagnation take effect worsening the fragile economy.
The global economic risks in the war between the US/Israel and Iran continues with extremely unstable times ahead. President Trump warns of further strikes to Iran power plants and bridges is the strait is not full reopened by today's deadline. Itan has slammed Trumps threats and promised to retaliate if infrastructure is hit.
The Pakistan Prime Minister has asked President Trump to delay the Iran deadline of 8pm EST for 2 weeks and requests Iran to open the Strait as a gesture of good will. Breaking news just in- Talks between Iran and US confirm a 2-week ceasefire de-escalating geopolitical risks.
Key ISM (Institute for Supply Management) data came in ok, suggesting the US economy remains at healthy levels.
WTI moves to 117.00 per barrel amid extended closure of the Strait of Hormuz.
The Fed predicts the 1-year inflation expectation to reach 3.4% vs 3.0% prior.
US Durable Goods Orders fell to -1.4% in February from -0.5% coming in much lower than the -1.1% markets were predicting.
The Euro (EUR) was the strongest currency last week while the Japanese Yen (JPY) was the worst performer.
US Retail Sales 0.6% vs 0.5% expected and -0.1% prior
US Non-Farm Payroll 178,000 vs 65,000 expected
US Unemployment Rate 4.3% vs 4.4% predicted, 4.4% prior
All eyes will be on today's RBNZ cash rate announcement and policy statement with predictions we will see no change from 2.25%. With the war between the US and Iran entering its 11th week we have continued to see the New Zealand Dollar (NZD) depreciate off 0.6100 numbers against the US Dollar (USD) to 0.5700 this morning on general risk aversion. Today's RBNZ statement should be interesting firming up forward guidance and determining the kiwi's next direction. We suspect the central bank may look through short term energy inflation induced spikes and be prepared to tighten if necessary. However, we could also see a hawkish tone suggesting a hike towards the end of 2025. Positive news headlines could push up the NZD- especially if Trump agrees to a ceasefire.
Current Level: 0.5797
Support: 0.5680
Resistance: 0.5870
Last week's range: 0.5682- 0.5777
The Australian Dollar (AUD) has lengthened its hold over the New Zealand Dollar (NZD) to post a new high at 1.2165 (0.8220) marking 7 straight days of progress. This risk off environment has supported the AUD more so, predominantly as we have been saying- central bank divergence the key difference with the RBA hawkish rhetoric. Today’s RBNZ rate hold at 2.25% is a given but markets await future policy expectations. At 0.8250 this represents fantastic selling of AUD.
Current Level: 0.8206
Support: 0.8030
Resistance: 0.8340
Last week's range: 0.257-0.8373
Current Level: 1.2172
Support: 1.1990
Resistance: 1.2450
Last week's range: 1.1942-1.2110
The New Zealand Dollar (NZD) has depreciated further off 0.4325 (2.3130), the weekly open against the British Pound (GBP) clocking a fresh 12 week low of 0.4475 (2.2350) this morning, this marks 6 straight weeks of weakness. This week's key data comes in the form of the RBNZ cash rate announcement and following statement. Markets are expecting a hold at 2.25% and a hawkish tone- we shall see. A weekly close through key resistance at 0.4245 (2.3560) could signal a broader drop to 0.3920 (2.5500), the August 2015 low on a technical front.
Current Level: 0.4330
Support: 0.4300
Resistance: 0.4350
Last week's range: 0.4310-0.4349
Current Level: 2.3094
Support: 2.3000
Resistance: 2.3250
Last week's range: 2.2990-2.3198
The New Zealand Dollar (NZD) heads into its 5th week of declines against the Euro (EUR) coming off 0.5120 (1.9530) to trade back around 0.4945 (2.0230) as I write, posting an 11-week low this morning. The Euro has been supported by the "safe haven" buy as markets remain cautious around headlines in the conflict between Iran and the US. Any easing geopolitical situation should turn the cross around on improved sentiment. Balanced data and a lack of dovishness from the European Central Bank (ECB) of late have helped interest hikes expectations.
Current Level: 0.4965
Support: 0.4915
Resistance: 0.5000
Last week's range: 0.4949-0.4995
Current Level: 2.0140
Support: 2.000
Resistance: 2.0350
Last week's range: 2.0020-2.0239
The Australian Dollar (AUD) has held its ground relatively well over the past 3 weeks or so, with recent highs around 0.7150 and current levels at 0.6970 this is less than 1 cent. With decent local data printing in Australia and stable expectations around RBA policy remaining on hold with no aggressive easing on the horizon we should see the Aussie improve in the medium term. We also see China offering a commodities driven tail wind for the AUD which will also be helping. We have no US or Australian key data to print this week. Broader geopolitical pressures will be key.
Current Level: 0.7064
Support: 0.6925
Resistance: 0.7150
Last week's range: 0.6833- 0.6962
After a run lower in the Australian Dollar (AUD), British Pound (GBP) cross to 0.5165 (1.9360) the key Fib level prices reversed higher to trade back around 0.5245 (1.9060) this morning as we see the AUD back in charge. The RBA remains hawkish compared to the Bank of England (BoE) leaning towards rate cuts. This should continue to support the AUD in the big picture review. A retest of the high at 0.5335 (1.8750) looks favourable, especially if we see a postponement on Trump "Iran deadline" today.
Current Level: 0.5297
Support: 0.5165
Resistance: 0.5340
Last week's range: 0.5221-0.5234
Current Level: 1.8957
Support: 1.8740
Resistance: 1.9350
Last week's range: 1.9105-1.9150
The Australian Dollar (AUD) consolidated around 0.5975 (1.6740) levels last week picking up bids early this week to claw back months of recent losses to 0.6020 (1.6620) in early Tuesday trading. Geopolitical concerns in the Middle East have seen investors exciting risk at the same time the ECB recent economic data has benefited the currency. The ECB positivity around possible rate hike expectations later in the year has also been a catalyst. If we see an improvement in the conflict, we could see the cross retest 0.6040 (1.6560)
Current Level: 0.6047
Support: 0.5930
Resistance: 0.6085
Last week's range: 0.5936-0.5997
Current Level: 1.6537
Support: 1.6430
Resistance: 1.6860
Last week's range: 1.6673-1.6844
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