• Civil unrest in France with riots in many regions saw the Euro (EUR) open the week lower.
• China’s economic growth beat forecasts in the third quarter ending September masked by a struggling real-estate sector and soft domestic demand. Results show growth grew 4.5% compared to 4.4% up from second quarter’s 4.3%.
• The kiwi is broadly up a touch in overnight NY market trading holding steady before Thursday’s CPI q/q release.
• Energy costs remains elevated with tensions in the Middle East escalated.
• US Mid Term elections are approaching. Just a couple of weeks out from the 3rd of November date many Americans surveyed feel pessimistic about their futures. President Trump is polling way down on support mainly due to the overall state of the US economy under his administration with many suggesting he is corrupt, dangerous, racist, and cruel with only 28% saying he has been effective.
• The British Pound (GBP) was the best performing currency last week on the main board while the Australian Dollar (AUD) was the worst performer.
The New Zealand Dollar (NZD) bounced off 0.5565 mid last week to post 0.5640 at the weekly close. Early week the kiwi looks in a mood to push higher posting 0.5670 before easing to 0.5660 mid-morning. CPI publishes Thursday with expectations the number could dip significantly from 1.5% in the second quarter to around 0.8% ending September. The data will set the scene for next week’s RBNZ cash rate announcement with the door still open for a hike to 3.0%. Technically we need to see a daily close above 0.5680 to signal further topside moves.
Current Level: 0.5665
Support: 0.5580
Resistance: 0.5740
Last week's range: 0.5564- 0.5674
Moves in the Australian Dollar (AUD), New Zealand Dollar (NZD) Friday saw the cross track from 0.8005 (1.2490) to 0.8150 (1.2270) before closing around 0.8130 (1.2300) levels. This week’s action has the kiwi looking a little soft with prices around the 0.8110 (1.2330) zone. Aussie unemployment printed poor with a gain of only 20,000 against expectations of 39,300 with the unemployment rate remaining at 4.7% higher than the 4.6% predicted. Meanwhile, the RBNZ are a touch more hawkish, this week’s CPI for the quarter ending September should give us a read on if the RBNZ will hike or not at next week’s meeting. There is a chance we have seen the end of pricing around 0.8000 (1.2500) levels for a while if the kiwi pick up further bids.
Current Level: 0.8112 (1.2320)
Support: 0.8025 (1.2270)
Resistance: 0.8150 (1.2460)
Last week's range: 0.8005- 0.8150 (1.2267- 1.2493)
The New Zealand Dollar (NZD) picked up key support to start the week coming off lows around 0.4230 (2.3650) to post 0.4260 (2.3490) mid-morning. UK and NZ CPI are the main risk events this week with UK inflation first up tomorrow evening expected to post 3.4% up from 3.1% at the same time last year before NZ q/q prints. How these both release should set the tone for NZD/GBP moves over the rest of the week. Our pick is for a marked down interest rate hike tone and prices to suit the GBP.
Current Level: 0.4255 (2.3501)
Support: 0.4230 (2.3200)
Resistance: 0.4310 (2.3640)
Last week's range: 0.4225- 0.4260 (2.3488- 2.3665)
The New Zealand Dollar (NZD) has extended gains over the struggling Euro (EUR) coming from 0.4995 (2.0020) late last week to reach 0.5060 (1.9770) in overnight NY. European stocks are down across the board with Italy and Spain leading declines as bond yields move higher. Anti govt protests in France spiralled into full blown riots over surging cost of living costs with anger towards Macron saying record high oil prices were to blame. A daily close in the cross above 0.5060 (1.9770) could spell further upside for the kiwi.
Current Level: 0.5052 (1.9794)
Support: 0.4975 (1.9700)
Resistance: 0.5075 (2.0100)
Last week's range: 0.4994- 0.5044 (1.9823- 2.0021)
Polls are showing President Trump is losing badly in the midterms with Republican approval hitting a record low of just 31%. Some positive economic data of late in the US is keeping the Fed hawkish to a point but with the RBA also hawkish and a willingness to raise rates further if inflation stays elevated, we favour topside moves in the pair. The Australian Dollar (AUD) extended its run higher from lasts week’s 0.6895 to reach 0.6980 this morning. After a failed attempt to break below 0.6910 the cross could retest 0.7000 soon.
Current Level: 0.6982
Support: 0.6880
Resistance: 0.7070
Last week's range: 0.6893- 0.7012
Support for the Australian Dollar (AUD) Monday saw the currency bounce back from 0.5210 (1.9200) zones to post 0.5250 (1.9060) Tuesday. A rise to Australian unemployment bought a touch of uncertainty to whether the RBA will hike interest rates in a couple of weeks, the balance of central bank interest rate expectations favours the GBP. However, we should get a steer on this theory this week when UK CPI y/y is released. A retest of 0.5290 (1.8900) continuation is where we see it.
Current Level: 0.5245 (1.9065)
Support: 0.5175 (1.8900)
Resistance: 0.5290 (1.9320)
Last week's range: 0.5200- 0.5294 (1.8889- 1.9228)
Riots across France over the weekend have sent the Euro (EUR) reeling, while energy prices remain elevated amid tensions in the Middle East. Also, of note similar protests broke out across Europe fuelled by high cost of living in Italy, Belgium and Portugal. The Euro fell back sharply from 0.6150 (1.6260) to clock 0.6225 (1.6060) in early morning as it approaches the long term 2023 level at 0.6265 (1.5960)
Current Level: 0.6225 (1.6065)
Support: 0.6155 (1.5980)
Resistance: 0.6260 (1.6250)
Last week's range: 0.6148- 0.6268 (1.5953- 1.6265)
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