• Global oil stocks are rapidly depleting as the Iran war disruption persists. At the moment more than 23,000 Iran factories have been hit and over 1 million jobs lost with the UNDP (United Nations) suggesting up to 4M Iranians could drop into poverty as a direct result.
• Chinese Sales data for April (0.2% vs 2.0% expected) missed the mark the lowest number since 2022 as economic momentum declines on Iran war and weak local demand weighs the nation down.
• 15 May was Jerome Powell’s last day as the Federal Reserve Chairman. He took the office in Feb 2018 which covered the period through Covid 19, money printing, and inflation spikes. During his term Gold went from 1,330 to 4,600 and the S&P nearly tripled from 2,700 to 7,500.
• New Zealand’s service sector is still struggling, coming in at 48.9 in April up from 46.2 in March with the Iran war showing no signs of improvement, still well below the 50.0 key expansion threshold.
• The US Dollar (USD) was the strongest performer last week on the main board with the Canadian Dollar (CAD) the worst performer.
The New Zealand Dollar (NZD) extended losses over the week against the US Dollar (USD) to post 0.5820 off Mondays open. The 100-day moving average at 0.5900 couldn’t hold off downside momentum Friday as risk conditions deteriorated sliding well below this. The cross could be eyeing a deeper decline into the 0.57’s if the poor risk tone continues. US CPI published at 3.8% vs 3.7% expected in April y/y rising above the March 3.3% number. President Trump was back in China over the last few days the first time in 9 years. It looked like he brought the whole S&P 500 with him, no “big” news was forthcoming on economic deals as the greenback charged higher. The kiwi has bounced higher in early Tuesday back to 0.5875.
Current Level: 0.5877
Support: 0.5680
Resistance: 0.6000
Last week's range: 0.5833- 0.5968
The 2026-year long bear trend is still trucking along in the Australian Dollar (AUD), New Zealand Dollar (NZD) cross with price reaching 0.8165 (1.2245) at the close of the week marking the April 2013 low. Recently the RBNZ has turned more hawkish with the easing cycle now over siting higher inflationary pressures and weak domestic growth. The RBA minutes is later today and should continue with their hawkish tone. We have been singing the song of divergence between the two central banks for a long time; this period may be coming to an end. Australian unemployment prints Thursday and is predicted to remain around 4.3%.
Current Level: 0.8194
Support: 0.8165
Resistance: 0.8245
Last week's range: 0.8165-0.8241
Current Level: (1.2194)
Support: (1.2130)
Resistance: (1.2250)
Last week's range: (1.22133-1.2246)
Prices this week in the British Pound (GBP), New Zealand Dollar (NZD) cross have extended Friday’s pullback around 0.4385 (2.2810) to 0.4370 (2.2870) as risk is back on the table after renewed inflation fears and rising oil prices. UK CPI is expected to climb off 3.3% y/y in April with data out Wednesday, we are expecting the number to be as high as 3.6% and a reprice of the Bank of England cash rate forecast. Technically if we see a breakout through the lower trendline at 0.4365 (2.2900) this could signal further upside for the Pound.
Current Level: 0.4372
Support: 0.4315
Resistance: 0.4420
Last week's range: 0.4370-0.4418
Current Level: (2.2872)
Support: (2.2630)
Resistance: (2.3180)
Last week's range: (2.2633-2.2883)
The New Zealand Dollar (NZD) made good ground last week reaching highs around 0.5085 (1.9670) levels but has given back gains to end the week at 0.5020 (1.9930) in risk off markets. However, the Euro (EUR) has been under pressure in recent sessions attracting sellers with price moving back to 0.5045 (1.9820). Technically, a break below 0.5025 (1.9900) and 0.5065 (1.9750) on the topside are the targets we are watching for possible bigger shifts in momentum.
Current Level: 0.5039
Support: 0.4945
Resistance: 0.5090
Last week's range: 0.5022-0.5082
Current Level: (1.9845)
Support: (1.9650)
Resistance:(2.0230)
Last week's range: (1.9677-1.9911)
Inflation fears and rising oil prices sank the Australian Dollar (AUD) to end the week against the US Dollar (USD) with prices down at recent support around 0.7110. Risk off trade was prominent with crude rallying over 4% on speculation of prolonged oil supply disruptions. The Trump- Xi summit failed to provide any tangible trade solutions to end the war with Iran. Markets are feeling a little better into Tuesday with the AUD pushing back to 0.7180 levels. Thursday’s FOMC minutes could be dovish giving the AUD further upside momentum.
Current Level: 0.7171
Support: 0.7120
Resistance: 0.7270
Last week's range: 0.7138- 0.7271
The RBA delivered a hawkish hike early May which has extended the Australian Dollar (AUD) against the British Pound (GBP) of late. The RBA minutes releasing today won’t be supportive of the recent budget with expectations a deflationary slant in the long term. The cross posted 0.5400 (1.8530) at the end of the week a December 2023 low before closing around 0.5365 (1.8640). Prices into Tuesday extended towards 0.5340 (1.8740) with risk off sentiment in play.
Current Level: 0.5336
Support: 0.5170
Resistance: 0.5400
Last week's range: 0.5314-0.5394
Current Level: (1.8740)
Support: (1.8530)
Resistance: (1.9350)
Last week's range: (1.8538-1.8818)
Prices in the Australian Dollar (AUD), Euro (EUR) cross reversed Friday off the long term high (Dec 24) at 0.6210 (1.6100) to reach 0.6135 (1.6300) at the end of the week, the bottom of the long term trendline. This week’s RBA minutes is likely to be hawkish in contrast to the Australian Budget recently seen as deflationary. Geopolitical tensions around the Strait of Hormuz will continue to weigh on the EUR although we price in a hike from 2.15% to 2.4% so markets may start to price this in over the coming weeks.
Current Level: 0.6150
Support: 0.6080
Resistance: 0.6210
Last week's range: 0.6137-0.6207
Current Level: (1.6260)
Support: (1.6100)
Resistance: (1.6440)
Last week's range: (1.6110-1.6292)
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