Global markets are extremely nervous, as participants wait to see, whether the AI spectre is resolved. The massive capital investment, over a short period of time has consumed the real economy and markets. If this is overdone and is indeed an equity bubble, then the correction could be demonstrably dramatic. Also playing out in the UK, is the potential budget crises, which may now morph onto a political coup, unseating the PM. This uncertainty will be reflected in UK Gilts and the GBP.
The markets have been overtaken by nerves and worries over AI, considered by many, to be a massive bubble. This has infected currency and bond markets, reducing sentiment, which tends to hit trade exposed, commodity currencies. The NZD looked to headed back towards 0.5700, following stronger than expected PMI data and a surprise wave of tariff relief on many agricultural exports to the USA. The uncertainty in markets brought some reality to the KIWI, opening the week at 0.5650.
Current Level: 0.5651
Support: 0.5600
Resistance: 0.5900
Last week's range: 0.5632 - 0.5688
Panic spreading over markets in recent times, over a potential AI bursting bubble, were dispelled with fantastic results released by Nvidia. Nvidia beat earnings and revenue expectations and offered a hugely positive forecast for the future. Belatedly released Non-Farm Payrolls for September also dismissed fears of a faltering labour market. Fed minutes were the only black spot, hinting no rate rise for December, leading to support for the USD. This damaged the KIWI, which has now tested the downside of 0.5600.
The current interbank midrate is: NZDUSD .5592
The interbank range this week has been: NZDUSD .5591 - .5686
NZD/AUD (AUD/NZD) – NZD Crashes Toward 0.8600 After Months of Heavy SellingThe collapse in the NZD/AUD cross rate been precipitous and dramatic. In three months, it has lost five ‘Big Figures’. It has collapsed, from above 0.9100, to trading down towards 0.8600. The monumental crash, has been a combination of the terrible economic conditions in NZ and the drive to cut interest rates from the RBNZ. The Central Bank is attempting to stimulate a flagging economy, but interest rate differentials are driving the ‘Big Sell’ in the KIWI.
NZD/AUDCurrent Level: 0.8711
Support: 0.8600
Resistance: 0.8900
Last week's range: 0.8608 - 0.8723
The KIWI/OZZIE cross rate fell back below 0.8700, as interest differentials drive flows towards the AUD. The NZ economic performance is showing small green shoots, but will need to be far more robust, to warrant and improvement in the cross rate.
The current interbank midrate is: NZDAUD .8672 AUDNZD 1.1540
The interbank range this week has been: NZDAUD .8651-.8730 AUDNZD 1.1435 - 1.1570
AUD/NZDCurrent Level: 1.1478
Support: 1.1400
Resistance: 1.1700
Last week's range: 1.1465 - 1.1615
The NZD/GBP cross rate has traded around recent lows below 0.4300, but the resurgent KIWI allowed for a slight recovery by the end of last week. The UK economic situation is worse than NZ, with the budget fast approaching and rumours of a coup against the British PM. This has prompted a spike in UK Gilt yields and this could potentially explode. The UK PM hinted that taxes would not rise, after the Chancellor of the Exchequer had all but confirmed a rise, to cut the deficit. Uncertainty and contradictions will only bring volatility.
NZD/GBPCurrent Level: 0.4297
Support: 0.4200
Resistance: 0.4500
Last week's range: 0.4278 - 0.4326
The NZD/GBP cross rate has slipped back below 0.4300, as the KIWI stumbles lower. This cross rate is heavily dependent on developments in the UK economy, with all eyes on the most important British budget, due in a matter of days. Watch UK Gilts for a preview and any spike in yields, could presume a disaster.
The current interbank midrate is: NZDGBP .4275 GBPNZD 2.3391
The interbank range this week has been: NZDGBP .4280-.4333 GBPNZD 2.0950-2.4001
GBP/NZDCurrent Level: 2.3261
Support: 2.3000
Resistance: 2.3700
Last week's range: 2.3113 - 2.3354
The EUR has regained the default trading levels around 1.1600 v the USD. The cross rate with the KIWI has continued around 0.4900, with moves above and below, due to fluctuations in the NZD trade. The good news from export trade to the US set the NZD on the road to recovery, but reality has hit home in the new week, with the NZD retracing.
NZD/EUROCurrent Level: 0.4878
Support: 0.4850
Resistance: 0.5000
Last week's range: 0.4857 - 0.4897
EURO/NZDCurrent Level: 2.0500
Support: 2.0000
Resistance: 2.2000
Last week's range: 2.0418 - 2.0587
Australian economic conditions remain testing, but welcome news on the US tariff front, encouraged markets. The US lifted US sanctions on food, in an effort to drive the domestic price of food, lower. Good news for agriculture export Countries such as NZ and Australia. This supported the AUD which recovered some lost ground, but has slipped back below 0.6500, due to market uncertainty in the new week of trade.
Current Level: 0.6483
Support: 0.6400
Resistance: 0.6600
Last week's range: 0.6482 - 0.6579
The AUD has slipped back below 0.6500, following a series of unflattering economic reports and a resurgent reserve currency. The latest Fed Minutes revealed further reluctance, from the outgoing Federal Reserve Chairman, to cut rates. This supports a stronger US Dollar and pushed the AUD towards lows. Troubles and uncertainty over the AI bubble were dispelled with the Nvidia results, at least temporarily
The current interbank midrate is: AUDUSD .6456
The interbank range this week has been: AUDUSD .6435-.6537
The AUD has shown some inherent weakness of late, but nothing on the British economic and political upheaval. Markets keenly await the all-important UK budget, which was expected to address the spiralling deficit, but has instead sparked political upheaval. The PM has contradicted the Chancellor of the Exchequer and ruled out tax rises, in the budget, which has sparked an apparent move to change the leadership. All of this crises-management can only be bad for the Gilt and GBP market.
Current Level: 0.4931
Support: 0.4900
Resistance: 0.5100
Last week's range: 0.4929 - 0.5003
GBP/AUDCurrent Level: 2.0280
Support: 2.0050
Resistance: 2.2500
Last week's range: 1.9982 - 2.0281
The EUR has traded steadily above 1.1600, with little fluctuation over the last week of trade. The Australian Dollar was resurgent towards the end of last week, but the new week has brought further market uncertainty, allowing the AUD/EUR cross to fall back to 0.5600. Watch for some big inflation numbers out of Europe and trade developments.
Current Level: 0.5598
Support: 0.5500
Resistance: 0.5700
Last week's range: 0.5595 - 0.5662
The AUD/EUR cross rate stumbles around trading lows of 0.5600, mired by weakness from both the EUR and the AUD. The US Dollar reserve continues to attract flows, thus undermining the cross rates, with supper attractive interest rate differentials. Look for out-of-the-box economic data, at the margins, to break the cross rate out of this trading range.
The current interbank midrate is: AUDEUR .5596 EURAUD 1.7869
The interbank range this week has been: AUDEUR .5575-.5637 EURAUD 1.7729-1.7934
EURO/AUDCurrent Level: 1.7863
Support: 1.7500
Resistance: 1.8000
Last week's range: 1.7657 - 1.7870
