• Goldman Sachs now forecasts no Fed Rate cuts until 2027 citing Friday’s jobs number and low unemployment. The general market is still pricing in a hike in December and as early as September.
• Our market risk mood indicator suggests markets Monday opened in “risk off” sentiment.
• Bank of England’s (BoE) Bailey spoke late Friday saying he is not rushing to hike rates targeting above comfortable inflation as a temporary geopolitical event. If wage pressures enter the equation a policy review would be needed.
• The Bank of Canada (BoC) is expected to leave interest rates on hold this week at 2.25%.
• The European Central Bank (ECB) is widely predicted to raise interest rates from 2.15% to 2.40%.
• Gold drops over 3% during the Friday New York session falling to 3 month lows.
• The New Zealand Dollar (NZD) was the strongest performer last week on the main board while the Japanese Yen (JPY) was the worst performer- 4 weeks in a row.
Market risk mood recovered a touch into early Tuesday sessions with the New Zealand Dollar (NZD) pushing up off 0.5780 levels to reach 0.5830. Geopolitical uncertainty still has risk currencies like the kiwi locked into a bear bias against the US Dollar (USD) with diverging priorities between US and Iran taking a toll. Also of concern is the widening opinions between Netanyahu and Trump after Iran launched missile attacks on Israel. Non-Farm Payroll Friday came in strong at 172,000 new people employed in the month of May after markets were expecting 85,000. Focus shifts to this week’s US inflation data Thursday. Technical levels suggest we may see an improvement this week by the NZD.
Current Level: 0.5800
Support: 0.5775
Resistance: 0.6000
Last week's range: 0.5794- 0.5985
After the New Zealand Dollar (NZD) gave back previous week gains from 0.8340 (1.1990) to 0.8220 (1.2165) the kiwi improved off Mondays open back towards 0.8250 (1.2125) areas. We see a fundamental shift in this cross over the following weeks with expectations of a retrace to 0.8350 (1.1980) as divergence between the two central banks starts to shrink. Markets are pricing in a 90% chance of a hike by the RBNZ in July while the markets see the chances of a hike by the RBA at next week’s meeting at 20% and unlikely. No tier 1 economic data to publish this week.
Current Level: 0.8241
Support: 0.8130
Resistance: 0.8375
Last week's range: 0.8220-0.8340
Current Level: (1.2127)
Support: (1.1940)
Resistance: (1.2300)
Last week's range: (1.1988-1.2165)
The British Pound (GBP) climbed to reach 2.3030 (0.4340) late in the week against the New Zealand Dollar (NZD) meeting key 5-week resistance. The kiwi fought back Monday getting through to 0.4370 (2.2890) before settling around 0.4360 (2.2950). Governor Bailey spoke Friday and sounded rather cautious than aggressive on policy saying the BoE were in no hurry to raise rates. UK GDP m/m prints Friday and could show a negative number for April.
Current Level: 0.4349
Support: 0.4340
Resistance: 0.4375
Last week's range: 0.4345-0.4451
Current Level: (2.2993)
Support: (2.2850)
Resistance: (2.3040)
Last week's range: (2.2465-2.3013)
The New Zealand Dollar (NZD) has held prices around 0.5035 (1.9860) against the Euro (EUR) in early Tuesday sessions, however with risk off markets dominating moves we could see numbers retest support at 0.5020 (1.9930) today. The Euro remaining well supported after headline CPI accelerated to 3.2% in the month of May marking the highest level in over 2 years. Friday’s ECB cash rate announcement hike from 2.15% to 2.4% is largely priced in but could further support buying of the currency in the lead up.
Current Level: 0.5030
Support: 0.5020
Resistance: 0.5070
Last week's range: 0.5030-0.5140
Current Level: (1.9880)
Support: (1.9715)
Resistance:(1.9930)
Last week's range: (1.9465-1.9877)
The Australian Dollar (AUD) and risk currencies were smoked late Friday the Aussie falling to 0.7030 against the US Dollar (USD) an 8-week low. US Non-Farm Payroll came in hot and unemployment remained unchanged at 4.3% surging the greenback as the economy added 172,000 jobs in May – mainly in hospo and local government. This will increase the probability of a Fed hike later in 2026. Markets are also predicting an 20% chance the Strait of Hormuz will be opened up by the end of June and 40% the end of July. If this happens, we could see the AUD trade significantly higher to possibly retest the 0.7700 zone.
Current Level: 0.7037
Support: 0.7000
Resistance: 0.7250
Last week's range: 0.7042- 0.7189
The British Pound (GBP) extended its bull theme last week travelling to reach 1.8935 (0.5280) where price sits currently. This marks the 8-week high against the Australian Dollar (AUD) as markets buy the safe haven Pound. Governor Bailey reiterated the difficulties juggling with high inflation and raising interest rates but wasn’t going to be persuaded to raise to quick.
Current Level: 0.5276
Support: 0.5170
Resistance: 0.5340
Last week's range: 0.5280-0.5340
Current Level: (1.8953)
Support: (1.8720)
Resistance: (1.9345)
Last week's range: (1.8717-1.8936)
The Euro (EUR) extended its bull run Monday against the Australian Dollar (AUD) to 1.6370 (0.6110) meeting the 5-week low in the cross as the Euro remained well supported on recent data. Eurozone inflation reinforced expectations the ECB would continue with its tightening path. CPI climbed to 3.2% y/y in May the highest level in over 2 years. The ECB meet this week and should raise rates from 2.15% to 2.4% helping to underpin the demand for the EUR for a while at least until the runup to next week’s RBA release.
Current Level: 0.6102
Support: 0.6005
Resistance: 0.6180
Last week's range: 0.6115-0.6178
Current Level: (1.6388)
Support: (1.6180)
Resistance: (1.6650)
Last week's range: (1.6186-1.6352)
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