• Markets remain cautious heading into the week driven by Middle East tensions around the strait of Hormuz.
• Bank of Japan (BoJ) holds back on raising rates from 0.75% in a 6-3 vote. The hawkish leaning central bank choosing to leave rates unchanged despite higher crude oil prices.
• Sticky inflation in the US and oil shocks have ensured the Federal Reserve won’t cut rates this week at their policy meeting.
• Iran is expected to come forward over the next day or so with a new peace proposal.
• The Bank of England (BoE) and European Central Bank (ECB) both have monetary policy meetings this week- both expected to leave rates at 3.75% and 2.15%.
• We expect strong greenback selling over the next 2 days with equity markets re-positioning for month end flows.
• The New Zealand Dollar (NZD) has been the strongest performer over the past week while the US Dollar (USD) has been the worst performer.
The New Zealand Dollar (NZD) has been tracking sideways now for the past 3 weeks against the US Dollar (USD) pivoting around 0.5880 levels as punters watch the charts for direction. On one hand we have an improved rhetoric by the Reserve Bank supporting a stronger kiwi but all the while risk markets and geopolitical risks have outweighed all else. The Federal Reserve will hold their interest rate at 3.75% Thursday with recent crude prices annihilating any chances of cuts. This is Fed chair Powell’s last charge before Kevin Walsh steps in as the new “assumed” chairman. Flows towards the end of April could support the kiwi towards 0.6000.
Current Level: 0.5885
Support: 0.5850
Resistance: 0.5950
Last week's range: 0.5837-0.5922
5 straight weeks of gains by the Australian Dollar (AUD) has seen the currency swing higher to break fresh new levels of late against the New Zealand Dollar (NZD). Early this week we saw the kiwi underperform to clock a new low of 0.8190 (1.2210) a 13 year May low. Commodities have been the biggest driver of AUD strength of late creating further divergence between the two economies with NZ a net importer of oil. Aussie CPI prints tomorrow and should come in much higher at 4.8% from 3.7%. Topside moves in the NZD/AUD will be limited.
Current Level: 0.8208
Support: 0.8165
Resistance: 0.8265
Last week's range: 0.8201- 0.8261
Current Level: (1.2176)
Support: (1.2100)
Resistance: (1.2250)
Last week's range: (1.2104- 1.2193)
The Bank of England (BoE) will no doubt leave rate unchanged when they meet Thursday night NZT at 3.75% but maintain a bullish outlook for the rest of 2026 amid the ongoing Iran/Hormuz conflict. In the spotlight will be just how hawkish they are with rate hikes over the rest of 2026 with inflation becoming a real issue to contain. We expect 2 hikes by year end with expectations the longer the conflict in the strait of Hormuz continues the more supply chains and inflation are affected. This morning the cross is trading around 0.4355 (2.2970) and could push to the bottom of the recent range of 0.4340 (2.3050) over the week..
Current Level: 0.4353
Support: 0.4310
Resistance: 0.4375
Last week's range: 0.4340- 0.4380
Current Level: (2.2972)
Support: (2.2850)
Resistance: (2.3200)
Last week's range: (2.2830- 2.3035)
The New Zealand Dollar (NZD) extended its run higher Monday off 0.5020 (1.9930) to reach 0.5050 (1.9810) against the Euro (EUR) before giving back gains to 0.5025 (1.9900) into early Tuesday sessions as risk waned. The Euro finding support off the back of persistent Middle East tensions and risks in the strait of Hormuz which have pushed up energy prices. This brings added inflation risks leading into Friday’s ECB Cash Rate release where the ECB should retain 2.15%. However, with the outlook looking like ‘stagflation’ the ECB may release a poor economic forecast.
Current Level: 0.5022
Support: 0.4950
Resistance: 0.5050
Last week's range: 0.4988- 0.5047
Current Level:(1.9912)
Support: (1.9800)
Resistance:(2.0200)
Last week's range: (1.9810- 2.0045)
The Australian Dollar (AUD) pushed higher off the 0.7130 open against the US Dollar (USD) to post 0.7180 this morning, the cross hovering just below the June 2022 highs. The Aussie has been well supported of late on risk appetite and conversations around the RBA remaining hawkish in a solid inflationary backdrop. Despite geopolitical risks the AUD remains on a solid footing- this week’s CPI release y/y expected to reflect a rise from 3.8% to 4.7% ending March a gauge of how well the economy is doing prior to the Middle East conflict. Later in the week the Fed is widely expected to keep rates unchanged at 3.75%. We expect prices to push through 0.7200 in the coming days.
Current Level: 0.7169
Support: 0.7100
Resistance: 0.7200
Last week's range: 0.7109- 0.7185
Sideways shifts in the Australian Dollar (AUD), British Pound (GBP) is still the theme with price solid around 0.5300 (1.8850) zone. This week’s Australian CPI y/y for March releases tomorrow and is expected to rise considerably off 3.7% to 4.8%. Data will show that fuel prices rose around 35% in March. The RBA has been fearful of inflation pre-Iran conflict so it will be interesting what the new rhetoric will look like going forward and their appetite for hiking. We favour a retest of the 0.5340 (1.8740) area.
Current Level: 0.5303
Support: 0.5250
Resistance: 0.5335
Last week's range: 0.5283- 0.5310
Current Level: (1.8857)
Support: (1.8750)
Resistance: (1.9050)
Last week's range: (1.8830- 1.8927)
The Euro (EUR) continues to drop against a dominant Australian Dollar (AUD) coming off Monday’s 0.6100 (1.6390) to post 0.6140 (1.6290) as I write. Amid the “risk off” conflict in Iran and the strait of Hormuz the AUD has certainly outperformed, usually it would be the AUD devaluing. With the RBA more hawkish on policy and a firmer inflation backdrop this has kept the AUD bull run going. On the data front this week we have Australian inflation expected to rise y/y from 3.7% to 4.8% and European Central Bank cash rate announcement. The ECB rate will remain at 2.15% but they could pivot a lot more hawkish than they have been based on energy prices. We pick a retest of the 0.6185 (1.6170) area.
Current Level: 0.6121
Support: 0.6075
Resistance: 0.6185
Last week's range: 0.6067- 0.6122
Current Level: (1.6337)
Support: (1.6170)
Resistance: (1.6460)
Last week's range: (1.6333- 1.6480)
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