• The conflict in the Middle East is threatening to blow out again with Saudi led forces reportedly intercepting Houthi missiles and drones. Growing concerns for restrictions through the Strait of Hormuz are threatening to effect oil supplies and oil costs.
• This weeks Reserve Bank of New Zealand (RBNZ) meeting today at 2pm NZT is predicted to be a rise to 3.0% siting higher energy prices and a soft NZ Dollar. However, some of the board would prefer a hold to enable earlier hikes to run its course based on a weak labour market and soft economy generally.
• The Federal Reserve meet this week and are widely expected to leave interest rates unchanged at 4.0%. Higher oil costs have complicated the inflation outlook. A rise in December looks favourable.
• Australian CPI for the 3rd quarter releases Thursday and could come in much higher than the markets predicted number of 0.8%. This is extremely important data with a Nov 4th rate hike a 50/50 call next week.
• US and Canadian officials are working on a deal to ease tariffs on Canadian Steel and automotive parts.
• The Australian Dollar (AUD) was the best performing currency last week on the main board while the US Dollar (USD) was the worst performer.
The New Zealand Dollar (NZD) has been holding levels around 0.5700 for the past week against the US Dollar (USD). Both the Federal Reserve (Fed) and Bank of New Zealand (RBNZ) have interest rate announcements this week, first up the RBNZ, widely predicted to raise rates from 2.75% to 3.00% then the Fed tomorrow morning expected to hold at 4.0%. Attention will lie with Fed’s Warsh’s assessment of persistent inflation and the timing of further hikes. We could see the kiwi gain on the greenback today.
Current Level: 0.5680
Support: 0.5600
Resistance: 0.5730
Last week's range: 0.5651- 0.5709
Australian CPI y/y and the RBNZ cash rate announcement today should give us plenty of price moves around both announcements. Australian inflation first up is expected to print at 4.2% y/y up from August’s 4.0 and July’s 3.5% giving the RBA lots to consider prior to the RBA policy meeting next week. The Reserve Bank of New Zealand (RBNZ) are widely predicted to raise rates today at 2.00pm NZT from 2.75% to 3.0%. We are not supporters of such a move given the stale economic setting we see and frail nature of businesses not being able to raise prices for fear of going out of business. Prices in the cross hover around 0.8090 (1.2360) levels and could end up anywhere at the close of play today.
Current Level: 0.8080 (1.2375)
Support: 0.8025 (1.2280)
Resistance: 0.8145 (1.2460)
Last week's range: 0.8084- 0.8134 (1.2293- 1.2370)
Prices in the British Pound (GBP), New Zealand Dollar (NZD) extended Friday’s close at 0.4265 (2.3460) to post 0.4280 (2.3356) early Wednesday. The RBNZ is set to meet later today and raise interest rates from 2.75% to 3.0% despite earlier signalling a pause after inflation has fallen. This is the 3rd consecutive hike with some suggesting its to much given the fragile nature of the NZ economy. The UK annual budget is later today with fiscal plans affecting inflation concerns before next week’s Bank of England policy statement. We expect NZD setbacks could be limited over the rest of the week.
Current Level: 0.4270 (2.3419)
Support: 0.4230 (2.3350)
Resistance: 0.4280 (2.3650)
Last week's range: 0.4237- 0.4265 (2.3442- 2.3600)
The New Zealand Dollar (NZD) has reached 0.5120 (1.9540) overnight against the Euro (EUR) before settling around 0.5107 (1.9580) a fresh 8 week high for the kiwi. This afternoon’s RBNZ cash rate announcement is widely expected to be a raise from 2.75% to 3.00% before the European Central Bank (ECB) cash rate releases unchanged at 2.65% Friday morning. We think the cross could retest the long-term zone around 0.5120 (1.9520).
Current Level: 0.5105 (1.9590)
Support: 0.5075 (1.9520)
Resistance: 0.5120 (1.9700)
Last week's range: 0.5032- 0.5094 (1.9629- 1.9870)
The Australian Dollar (AUD), US Dollar (USD) cross has been quiet over the past week with prices pivoting around 0.7030 levels as punters anticipate Australian key CPI today followed by tomorrow’s Fed Cash Rate announcement. Aussie inflation points to an increase to 4.2% y/y above the 4.0% we saw in August. This said we could see the RBA move more aggressively to raise rates on the 4th of Nov date thus perhaps giving the AUD upside bias.
Current Level: 0.7034
Support: 0.7000
Resistance: 0.7070
Last week's range: 0.6946- 0.7036
With rises to inflation data later in Australia the AUD has climbed higher to reach 0.5285 (1.8920) after posting 0.5250 (1.9050) against the British Pound (GBP) earlier in the week. CPI is predicted to come in at 4.2% for the month of September the highest read since April’s 4.2% well above July’s low at 3.5%. A close above key resistance at 0.5290 (1.8900) could signal further upside moves for the AUD.
Current Level: 0.5285 (1.8921)
Support: 0.5235 (1.8870)
Resistance: 0.5300 (1.9100)
Last week's range: 0.5223- 0.5263 (1.8997- 1.9144)
Massive weakness in the Euro (EUR) continues with price smashing through resistance at 0.6250 (1.6000) to post 0.6315 (1.5840) this morning- the March 2023 high. Australian inflation is due out today as is expected to come in at 4.2% and give the AUD a boost before the European Central Bank monetary policy announcement Friday morning. The ECB are predicted to hold interest rates at 2.65%. Recent carnage in France and European Bond’s may be enough to shift the ECB dovish, we will see, certainly the recent tone has underpinned Euro bears.
Current Level: 0.6318 (1.5827)
Support: 0.5990 (1.5400)
Resistance: 0.6495 (1.6700)
Last week's range: 0.6201- 0.6284 (1.5913- 1.6126)
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