• Israeli Prime Minister Netanyahu has rejected Trump’s Gaza plan saying he wouldn’t pull back troops until Hamas is fully disarmed. The decision carries broader weight for the US/Iran conflict. Any breakdown in the Gaza ceasefire could feed into the conflict on the Strait of Hormuz.
• A softer second quarter inflation read in Australia gives room for the RBA to leave interest rates unchanged later today at 4.35%, CBA expects the central bank to hold over the rest of 2026.
• CPI in China rose 0.5% y/y in July a 6-month low while Producer Price Index rose 3.5% a fresh 3- month low as oil process and softer domestic demand moderated inflation.
• US Non-Farm Payroll came in light with a drop to the labour force of -23,000 in July. The participation rate plunged to 61.4% the biggest drop since covid 19.
• Canadian Unemployment eased from 6.5% to 6.4% adding more jobs in July than markets were expecting.
• The strongest main board currency last week was the Australian Dollar (AUD) while the worst performing currency was the US Dollar (USD) after a soft jobs report.
It has been a settled start to the trading week with the New Zealand Dollar (NZD), US Dollar (USD) bouncing around 0.5890 levels just off 10-week highs. Friday’s US Non-Farm Payroll release came in poor with a contraction in the jobs market shedding 23,000 jobs in July far worse than the 80,000 markets had predicted. This has raised questions around fading Federal Reserve rate hike expectations and renewed inflation and geopolitical risk around the Strait of Hormuz and lack of any meaningful agreement. This week’s US inflation report Thursday morning NZT should show 3.5% y/y before NZ inflation expectation forecast prints. The kiwi could struggle to reach 0.6000 over the week.
Current Level: 0.5881
Support: 0.5850
Resistance: 0.5920
Last week's range: 0.5856- 0.5905
This week its all about the RBA cash rate and statement due later today. The New Zealand Dollar (NZD), Australian Dollar (AUD) cross bounced off 0.8395 (1.1915) mid last week – the highest level since early March this year to trade around 0.8335 (1.2000) levels with markets expecting a hawkish “hold” at 4.35%. To see bearish continuation, we would need to see 0.8300 (1.2050) develop and a weekly close below this marker for further downside structural shifts.
Current Level: 0.8334
Support: 0.8265
Resistance: 0.8395
Last week's range: 0.8320-0.8394
Current Level: (1.1990)
Support: (1.1912)
Resistance: (1.2100)
Last week's range: (1.1912-1.2018)
The New Zealand Dollar (NZD) has broken key channel support Monday against the British Pound (GBP) through 0.4365 (2.2920) to post 0.4355 (2.2960) in early Tuesday in “risk off” markets signalling further bearish continuation. UK Gross Domestic Product (GDP) prints this week Thursday night NZT and should reflect a negative 0.4% in the second quarter down from 0.6% in the first quarter. A breakout past the 100-day moving average at the 0.4345 (2.3020) area could spell further weakness for the kiwi.
Current Level: 0.5221
Support: 0.4315
Resistance: 0.4385
Last week's range: 0.4352-0.4384
Current Level: (1.9153)
Support: (2.2810)
Resistance: (2.3180)
Last week's range: (2.2810-2.2974)
The New Zealand Dollar (NZD) has moved sideways over the past week against the Euro (EUR) pivoting off prices around 0.5100 (1.9620). The only tier one economic data publishing this week in the pair is NZ quarterly Inflation expectations. The two-year inflation expectation is currently 2.53% with the next survey out this Thursday when markets expect this number to increase to around 2.6-2.7% based on a weak jobs market and predictions the unemployment rate could rise further from 5.6%.
Current Level: 0.5094
Support: 0.4945
Resistance: 0.5140
Last week's range: 0.5079-0.5114
Current Level: (1.9630)
Support: (1.9450)
Resistance:(2.0230)
Last week's range: (1.9552-1.9686)
The Australian Dollar (AUD), US Dollar (USD) remains locked in a bull trend channel from 0.6860 in late June trading, printing higher highs and higher highs to 0.7060 this morning. The Reserve Bank of Australia cash rate and policy announcement is later today with consensus we should see the RBA leave rates unchanged at 4.35% in a hawkish hold. All 4 major banks are expecting the central bank to leave rates unchanged. Persistence underlying inflation and a resilient jobs market should keep prospects of a further hike on the table. We don’t expect too much downside bias in the cross this week.
Current Level: 0.7055
Support: 0.7000
Resistance: 0.7150
Last week's range: 0.6983- 0.7077
Prices in the Australian Dollar (AUD), British Pound (GBP) cross have crossed below key channel support at 0.5230 (1.9120) to post 0.5220 (1.9150) this morning. Setbacks in the Aussie we think could be well supported this week backed by expectations the RBA could be release a hawkish hold at 4.35%. The central bank is widely predicted to leave rates unchanged based on persistent inflation and a resilient jobs market. A retest of the zone around prior highs at 0.5245 (1.9060) looks favourable.
Current Level: 0.5221
Support: 0.5175
Resistance: 0.5265
Last week's range: 0.5192-0.5244
Current Level: (1.9153)
Support: (1.9000)
Resistance: (1.9320)
Last week's range: (1.9068-1.9258)
The Australian Dollar (AUD) swept downside liquidity at 0.6095 (1.6405) late last week against the Euro (EUR) to steadily improve into the weekly close. The AUD has extended moves Monday to 0.6115 (1.6350) on improved risk and a hawkish RBA tone. The Reserve Bank of Australia (RBA) is expected to hold interest rates today at 4.35% in a hawkish review and highlight resistant inflation, this said, we remain supportive of the AUD as the pair eye the prior high zone around 0.6155 (1.6250)
Current Level: 0.6109
Support: 0.6060
Resistance: 0.6155
Last week's range: 0.6059-0.6112
Current Level: (1.6369)
Support: (1.6250)
Resistance: (1.6500)
Last week's range: (1.6351-1.6503)
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