• New Zealand Dollar tests lows Monday.
• Discussions on re-opening the Strait of Hormuz between Washington and Tehran have been held with arrangements of a phased arrangement. Neither side however want to surrender leverage. The most plausible scenario could be for Iran to allow passage through the Strait in return for the US lifting its economic blockade and regaining frozen assets.
• Fed’s Williams says there is no urgency to hike interest rates pushing back on the idea the central bank is fast tracking rates.
• Anthropic CEO Dario Amodei will attend a dinner at the White House after months of tensions as Congress weighs up new AI guardrails. Recently Open AI agents used techniques to hack into the UN data site by bypassing security controls.
• The RBA raises interest rates from 4.35% to 4.60% the highest in 11 years with stubborn inflation keeping upside risks in focus with heightened uncertainty of higher inflation materialising.
• Oil prices moves sharply lower under 100.00 to 89.00 per barrel in Monday trading.
• The strongest G10 board currency over the past week has been the Canadian Dollar (CAD) while the worst performing currency is the Australian Dollar (AUD).
The New Zealand Dollar (NZD) extended its run lower against the US Dollar (USD) dropping to fresh lows of 0.5625 equalling the level of 26 June and 2026 low. Below this point the kiwi may find support around 0.5570 but if it forms lower bear continuation there is nothing but the abyss. Of concern for the kiwi is a stronger USD with inflation targets increasing with further policy adjustments required as the Fed don’t see the inflation returning to 2.0% targets any time soon. Friday’s Non-Farm Payroll (NFP) report should confirm a lighter workforce and a rise to unemployment.
Current Level: 0.5640
Support: 0.5625
Resistance: 0.5680
Last week's range: 0.5649- 0.5748
The New Zealand Dollar (NZD), Australian Dollar (AUD) stabilised around 0.8070 (1.2380) levels after falling to 0.8006 (1.2490) last week. The RBA raised interest rates last night to 4.60% the highest since 2011, slightly supportive for the AUD with Governor Bullock playing down the importance of today’s inflation release. The RBA was not exactly dovish but didn’t confirm a hawkish slant for further hikes in November either. Today’s inflation read is predicted to print around 4.1% y/y in August from 3.5%, that’s a massive spike of which will mostly be baked into current levels. However, we still expect the NZDAUD to retest the 0.8000 (1.2500) level.
Current Level: 0.8072 (1.2378)
Support: 0.8000 (1.2280)
Resistance: 0.8145 (1.2500)
Last week's range: 0.8006- 0.8093 (1.2355- 1.2490)
Market nerves have impacted the vulnerable NZ Dollar (NZD) and the cross rate with the GBP, which has suffered accordingly. The cross has operated in a tight trading range, well above 0.4300 (2.3255), in recent times. The bearish sentiment in markets, led to a flight towards the safety of the US Dollar and the NZ cross-rare with the GBP, has slumped to 0.4250 (2.3530). The NZ economy is extremely vulnerable to energy supply constraints and this is reflected in the currency.
Current Level: 0.4261 (2.3468)
Support: 0.4250 (2.3250)
Resistance: 0.4300 (2.3535)
Last week's range: 0.4259- 0.4302 (2.3243- 2.3476)
Pressure from bond markets weigh heavily on equity and currency markets. Bond yields have soared to record territory, in Western Countries, as the diesel shortages in the West begins to impact those with supply issues. NZ and Australia are unable to prevent the damage of the energy crisis and as such, vulnerability is reflected in their respective currencies. The NZD/EUR cross has fallen from 0.5050, a week ago, to trade down as low as 0.4970. The uncertainty in markets is likely to continue.
Current Level: 0.4974 (2.0105)
Support: 0.4945 (2.000)
Resistance: 0.5000 (2.0215)
Last week's range: 0.4963- 0.5015 (1.9938- 2.0147)
The Australian Dollar (AUD) moved sharply lower late Monday post the RBA rate rise dropping below the key 0.7000 level against the US Dollar (USD). The RBA raises rates unanimously from 4.35% to 4.60% and said further risks to inflation are materialising. Removing earlier rhetoric around inflation returning to the target range late 2027 the central bank confirming upside risks to this forecast. One may have expected the AUD to rise vs the greenback post release, but Aussie has extended its decline posting 0.6965 a 10-week low. A more hawkish Fed looked to be the catalyst for the slump with US yields rising. Non-Farm Payrolls prints Friday and will throw up the standard volatility. We favour an oversold AUD with price perhaps bouncing today.
Current Level: 0.6985
Support: 0.6950
Resistance: 0.7070
Last week's range: 0.7003- 0.7139
The energy crisis has been re-ignited, lighting up the bond market and testing nerves right across markets. The RBA recognised the threat of surging inflation, raising rates by a further 25 basis points, but failed to support the currency. The AUD/GBP cross rate was trading in a tight range well above 0.5300 (1.8870), but the recent drama has seen the cross fall back to 0.5270 (1.8975). More uncertainty and vulnerabilities are likely to continue until a solution to the energy crisis is found.
Current Level: 0.5277 (1.8950)
Support: 0.5265 (1.8750)
Resistance: 0.5335 (1.9000)
Last week's range: 0.5296- 0.5336 (1.8738- 1.8881)
The RBA recognised the inflation surge in the economy and raised rates a further 25 basis points to highs (4.60%) not seen since 2011. This added incentive to buy the currency did not materialise, as markets perceived this as a serious issue detrimental to the Australian economy. Energy vulnerability is reflected in the performance of the AUD and the measure against the cross-rates. The AUD/EUR cross-rate has crashed, from well above 0.6200, all the way back to 0.6150 (1.6260). This is likely to continue as the energy crisis deepens.
Current Level: 0.6159 (1.6236)
Support: 0.6155 (1.6080)
Resistance: 0.6220 (1.6250)
Last week's range: 0.6154- 0.6221 (1.6073- 1.6249)
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