• Markets closed the week on a positive risk footing after progress in the US/Iran draft negotiations. Equity prices rallied and crude oil prices stabilised around $90 a barrel.
• The New Zealand Dollar (NZD) and Australian Dollar (AUD) both gapped higher off the weekly open ahead of the RBNZ Cash rate announcement and Australian key CPI y/y tomorrow.
• US and Iranian officials are reportedly closer to an agreement that would see the re-opening of the Hormuz Strait as soon as 30 day’s time. The framework of the deal would see the US remove its blockade with Iran allowing full access in return. There is also the tiny matter of the removal of enriched uranium.
• The New Zealand Budget releases Thursday at 2pm NZT.
• Fed start to price in interest rate hikes from late 2026 early 2027 if inflation fails to balance out.
• The Australian Dollar (AUD) is the strongest performer this week on the main board while the Japanese Yen (JPY) has been the worst performer.
Overnight markets have leaned into the news of the Strait of Hormuz being opened up as early as 30 days time. News suggests an agreement has been reached with mines being removed and no tolls for shipping access. However, the nuclear part of the deal remains challenging with negotiations still ongoing. The New Zealand Dollar (NZD) held prices around 0.5870 against the US Dollar (USD) as markets were closed for US Memorial Day holiday. Tomorrow’s RBNZ cash rate release is widely predicted to remain at 2.25%.
Current Level: 0.5870
Support: 0.5800
Resistance: 0.6000
Last week's range: 0.5814-0.5887
The New Zealand Dollar (NZD) extended its decline off Monday’s open against the Australian Dollar (AUD) dropping to 0.8185 (1.2220) early this morning. How the cross performs this week will depend on tomorrow’s RBNZ cash rate announcement and Australian CPI releases. Inflation is expected to dip to 4.4% from 4.6% y/y still very high with fuel and transport costs still a big concern. Rhetoric around economic forecasts should keep the NZ Cash rate anchored at 2.25% for a while longer, however we could see a change in sentiment develop and a shift towards a hike by the RBNZ as early as July.
Current Level: 0.8178
Support: 0.8165
Resistance: 0.8250
Last week's range: 0.8165-0.8240
Current Level: (1.2216)
Support: (1.2120)
Resistance: (1.2250)
Last week's range: (1.2134-1.2247)
This week’s economic action will focus on the Reserve Bank of New Zealand (RBNZ) cash rate announcement. A hold at 2.25% is 95% priced in with talk around how soon the central bank “pulls up stakes” on their neutral policy. With near term inflation tracking higher because of rising energy costs this will impact the 2026-2027 growth outlook and could lead to the RBNZ changing to a more tightening policy stance with the chances of a hike at their July meeting. Meanwhile the Bank of England’s (BoE) Bailey speaks Friday.
Current Level: 0.4345
Support: 0.4315
Resistance: 0.4415
Last week's range: 0.4347-0.4390
Current Level: (2.3015)
Support: (2.2660)
Resistance: (2.3190)
Last week's range: (2.2774-2.3000)
Improved sentiment may see the New Zealand Dollar (NZD) improve off 0.5045 (1.9820) against the Euro (EUR) over the coming sessions as lower geopolitical tensions may attract buyers into the kiwi. ECB rhetoric of late has leaned relatively firm with policymakers acknowledging the upside risks to inflation and the easing cycle may be nearing its end. Certainly, comments from the Belgium’s Wunsch saying the eurozone could be at the start of an inflation problem may imply interest rates may be restrictive for longer. The cross sits at the bottom of a long-term channel which could signal a retest of the 0.5075 (1.9700) zone in the short term.
Current Level: 0.5040
Support: 0.5000
Resistance: 0.5075
Last week's range: 0.5016-0.5063
Current Level: (1.9841)
Support: (1.9700)
Resistance:(2.000)
Last week's range: (1.9748-1.9936)
The Australian Dollar (AUD) has climbed higher off the weekly open rising to 0.7170 levels this morning against the US Dollar (USD) a decent shift off last week’s “risk off” tone when we saw the pair trading around 0.7075 mark. The Aussie has been well supported by a turn in risk sentiment surrounding the potential US/Iran peace agreement and the Strait of Hormuz plans to re-open in around 30 days’ time. Australian inflation y/y prints tomorrow and should come in around 4.4% still very high, with unemployment figures surprising higher last week this will be an ongoing concern for the RBA with odds further hikes are likely.
Current Level: 0.7171
Support: 0.7100
Resistance: 0.7250
Last week's range: 0.7078- 0.7183
US holiday Monday created limited action in currencies with the British Pound (GBP), Australian Dollar (AUD) pivoting around 0.5315 (1.8820) areas. We await tomorrow’s Australian CPI release with expectations of a print around 4.4% slightly down from 4.6% y/y. However, this is still seen as to high putting the RBA is a difficult position with unemployment rising and fuel prices a big contributor. A CPI result around 4.5% should keep RBA hike chances alive for a possible August rise to rates.
Current Level: 0.5310
Support: 0.5170
Resistance: 0.5390
Last week's range: 0.5288-0.5374
Current Level: (1.8832)
Support: (1.8550)
Resistance: (1.9350)
Last week's range: (1.8607-1.8908)
The Australian Dollar (AUD) bounced off key support around 0.6120 (1.6350) last week to claw back losses against the Euro (EUR) to 0.6160 (1.6230) in morning trade. French and German holiday’s Monday made for thin market conditions as we await Australian CPI data publishing tomorrow. Forecasts suggest we could see a small dip from 4.6% y/y to 4.4% keeping the Aussie “bid” especially given we are seeing a little central bank divergence at the moment with Eurozone growth forecasts at risk of recession. A retest of the zone around 0.6210 (1.6100) the long term high in the pair is possible this week if we continue to see risk markets improve.
Current Level: 0.6159
Support: 0.6110
Resistance: 0.6205
Last week's range: 0.6104-0.6165
Current Level: (1.6236)
Support: (1.6115)
Resistance: (1.6370)
Last week's range: (1.6218-1.6381)
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