• The Federal Govt remains in lockdown.
• Gold sours over 2% as US Treasury yields fall.
• Markets are pricing in a 50-point Fed rate cut through to year end.
• President Trump said “its going to be fine with China” adding that adding 100% tariffs on China isn’t sustainable. While these tensions bought relief to markets the unpredictable rhetoric continues so fuel currency uncertainty and create “risk off” sentiment.
• ECB’s Nagal says policy is a “wait and see” approach.
• While traders await a breakthrough in China/US trade negotiations, US government shutdowns continue to delay many key US economic reports.
• The US Dollar (USD) has been the strongest currency over the past week while the New Zealand Dollar (NZD) has been the worst performer.
The New Zealand Dollar improved off the weekly open to 0.5750 against the US Dollar (USD) before settling around 0.5740 into Tuesday. NZ CPI rise unexpectedly yesterday coming in at 3.00% y/y versus a 2.8% ending the third quarter. This is a 15-month high and is unlikely to halt pending rate cuts. The 11% rise in electricity prices doing the damage with the highest annual increase since 1989. The offsets were cheaper petrol. The RBNZ target band is 1-3% with no further expected rises to flow through in the next several quarters. The central bank is still predicted to cut 25 points at their Nov 26th Meeting. The US Federal Govt has been shut down now for 3 weeks, it looks like this could drag on until early November. The kiwi is still trading in a bear trend and could retest 0.5700 this week.
Current Level: 0.5745
Support: 0.5700
Resistance: 0.5800
Last week's range: 0.5681 - 0.5755
The New Zealand Dollar (NZD) needs a break past 0.8850 (1.1300) levels against the Australian Dollar (AUD) to shift the current downside momentum seen over the last 5 months or so. NZ trade balance rose from -2.99B to -2.25B y/y in September with exports in September falling 5.94B to 5.82B. NZ CPI y/y increased to 3.0% from 2.8% yesterday to the very top of the RBNZ’s comfortable band with electricity prices being the biggest contributor. Expectations are still for the RBNZ to cut the cash rate to 2.25% next month to get inflation lower. We expect a retest of the 0.8770 (1.1400) level this week.
Current Level: 0.8810
Support: 0.8740
Resistance: 0.8850
Last week's range: 0.8776- 0.8868
Current Level: 1.1341
Support: 1.1300
Resistance: 1.1440
Last week's range: 1.1276 - 1.1394
As trade tensions ease between US and Chinese official’s markets are feeling a little more positive this morning with the New Zealand Dollar (NZD) making gains early in the week to 0.4285 (2.3330) against the British Pound (GBP). If the kiwi can close the week above 0.4310 (2.3200) it will break a 5-week losing run. NZ CPI jumped higher than predicted yesterday to 3.00% from 2.8% y/y cementing a RBNZ cut come November. UK CPI also publishes Wednesday night and may also rise to 4.0% from 3.8% staying around the Jan 2024 highs.
Current Level: 0.4285
Support: 0.4260
Resistance: 0.4310
Last week's range: 0.4250 - 0.4303
Current Level: 2.3337
Support: 2.3200
Resistance: 2.3480
Last week's range: 2.3235 - 0.3524
The New Zealand Dollar (NZD) has improved off late last week’s 0.4880 (2.0480) against the charging Euro (EUR) to clock 0.4935 (2.0260) early Tuesday. The kiwi still has a way to travel to reach the key zone around 2.000 (0.5000) mark last seen a couple of weeks back. Eurozone inflation ticked up to 2.2% in September easing ECB rate cut pressures. French and German manufacturing later this week is expected to print up for October.
Current Level: 0.4932
Support: 0.4900
Resistance: 0.5000
Last week's range: 0.4881 - 0.4956
Current Level: 2.0275
Support: 2.000
Resistance: 2.0400
Last week's range: 2.0177 - 2.0485
The Australian Dollar (AUD) edged up to 0.6500 this morning against the US Dollar (USD) in the wake of receding US/China trade tensions. The Federal Reserve are almost certain to cut their interest rate at the October 30th meeting. These signs are only positive for the Aussie as Australian economy rely heavily on exports to Beijing. Meanwhile Australian unemployment rose to 4.5% in September the highest in nearly 4 years calling for the RBA to cut more aggressively. US CPI drops on Friday and is expected to rise from 2.9% to 3.0%.
Current Level: 0.6519
Support: 0.6400
Resistance: 0.6600
Last week's range: 0.6440 - 0.6532
Risk on sentiment has improved the Australian Dollar (AUD) this week to 0.4860 (2.0565) against the British Pound (GBP) extending last week’s move from 0.4800 (2.0830). Trade tensions between China and the US have improved sending the linked AUD currency rebounding. The mid-September high at 0.4870 (2.0540) is the new target, a close above this level and the pair could retest 0.4895 (2.0430). UK inflation prints tomorrow and should come in at 4.0% up from 3.8% in August highlighting the Bank of England (BoE) still have work to do.
Current Level: 0.4861
Support: 0.4830
Resistance: 0.4890
Last week's range: 0.4795 - 0.4895
Current Level: 2.0157
Support: 2.0450
Resistance: 2.0700
Last week's range: 2.0424 - 2.0850
The Australian Dollar (AUD) extended Friday’s push from 0.5515 (1.8140) levels into Monday to 0.5595 (1.7870) against the Euro (EUR), the currency remaining sensitive to geopolitical risks. France’s credit rating has been downgraded by S&P to AA- from AA+ due to fiscal uncertainty and political issues. The Aussie has been buoyed by improved China/US trade relations with Trump saying a 100% tariff is unsustainable. The only notable economic data to print this week for the cross is Eurozone Manufacturing. We think prices could reach the 0.5650 (1.7700) zone this week.
Current Level: 0.5594
Support: 0.5545
Resistance: 0.5650
Last week's range: 0.5507 - 0.5641
Current Level: 1.7876
Support: 1.7700
Resistance: 1.8040
Last week's range: 1.7725 - 1.8158
