• The RBNZ has cut the OCR by 50 points from 3.0% to 2.50% as we predicted.
• Australian Consumer Confidence fell 3.5% m/m in October continuing the declines from September’s 3.3%
• The DXY or the US Dollar Index which measures the value against six major currencies extends is run higher above 98.20 in a cautious market.
• New Zealand Business Confidence q/q down 18% in Q3 from Q2 previous 22%
• Bitcoin hits all-time high above 126,000 Monday.
• Gold rose to an all-time high just past the 3,990 mark – buoyed by prospects of Fed rate cuts and risk off sentiment.
• The Japanese Yen gaped “large” on the Monday open as Japan’s political situation changed. Sanae Takaichi won the leadership of Japan’s ruling party “Liberal Democratic (LDP) – she will be countries first prime minister. She is seen as dovish on monetary policy slashing the probability of a rate hike in their Oct 30th meeting from 60% to 25%.
• Global dairy prices are down- the index -1.6% from previous -0.8%
• The Japanese Yen (JPY) is the strongest currency this week while the New Zealand Dollar (NZD) is the weakest performer on the main board.
The New Zealand Dollar (NZD) has plummeted to a 6 month low this afternoon against the US Dollar (USD) to mid-0.5700 as the RBNZ cut interest rates 50 points to 2.50%. Wider market sentiment was for a 25 point cut but we always called a half cent move lower to enable more cashflow on the Street. The central bank is ready to cut again if required for inflation to settle around the 2.0% mark. Technically the kiwi has broken the downside support at 0.5750 and could be on its way to test 0.5580 around the 2025 low. Also of consideration is US Govt lockdowns causing a risk off tone.
Current Level: 0.5745
Support: 0.5760
Resistance: 0.6100
Last week's range: 0.5769 - 0.5842
The New Zealand Dollar (NZD) kicked back post the RBNZ rate cut Wednesday reversing all of the move lower from 0.5740 back to 0.5805 as market sentiment improved supporting risk. However, the kiwi hasn’t been able to hold the 0.5800 level Thursday selling off against the US Dollar (USD) to 0.5730 probably where it belongs if I was honest. Support is seen at 0.5680, below here at 0.5550 the long term low. Kiwi downside moves could be underpinned by US strength and risk aversion heading into the weekend.
The current interbank midrate is: NZDUSD 0.6555
The interbank range this week has been: NZDUSD 0.5733- 0.5844
The Reserve Bank of New Zealand (RBNZ) has cut interest rates by 50 points this afternoon from 3.0% to 2.5%. The New Zealand Dollar (NZD) has dropped hard against the main players and to 0.8755 (1.1420) vs the Australian Dollar (AUD). If we get a daily close below 0.8755 (1.1420) this will represent the lowest level (daily) since November 2013. We have speeches from RBA later this week which should give us further insights to policy direction. If the RBA are hawkish expect more downside in the NZD/AUD.
Current Level: 0.8750
Support: 0.8755
Resistance: 0.8895
Last week's range: 0.8758 - 0.8838
The RBNZ surprised markets Wednesday when the central bank cut interest rates by 50 points to 2.5% vs expectations of a 25-point cut. This sent the NZD/AUD cross to 0.8735 (1.1445) a September 22 low. The pair trades perilously close to the 0.8710 (1.1480) mark set in August 2015. Attention turns to RBA governor Bullock talking later today to hopefully offer up clues on monetary policy outlook. Next week’s Australian job numbers report could also set the tone for direction.
The current interbank midrate is: NZDAUD 0.8760 AUDNZD 1.1406
The interbank range this week has been: NZDAUD 0.8738- 0.8840 AUDNZD 1.1311- 1.1444
Current Level: 1.1416
Support: 1.1240
Resistance: 1.1420
Last week's range: 1.1314 - 1.1417
The New Zealand Dollar (NZD) made gains last week against the British Pound (GBP) reaching 0.4340 (2.3040) off 0.4300 (2.3255) breaking a 3-week bear streak. This week’s moves are back in favour of the GBP as uncertain markets and risk sentiment has seen punters selling the kiwi. US government shutdowns have spooked risk as well.
Current Level: 0.4288
Support: 0.4305
Resistance: 0.4340
Last week's range: 0.4300 - 0.4340
It’s been a game of two halves in the New Zealand Dollar (NZD), British Pound (GBP) this week, with the RBNZ cutting rates Wednesday from 3.0% to 2.5% increasing volatility. The cross clocking 0.4230 (2.3350) a November 2015 low with the kiwi smashed over the surprise result. Bank of England’s (BoE) Catherine Mann warns UK inflation expectations remains around 4.0% which will delay rate cuts until 2026. Also of note is the upcoming UK Autumn budget which will focus on fiscal spending with the potential to impose higher taxes which could weigh on the economy and the GBP.
The current interbank midrate is: NZDGBP 0.4318 GBPNZD 2.3158
The interbank range this week has been: NZDGBP 0.4282- 0.4341 GBPNZD 2.3034- 2.3352
Current Level: 2.3320
Support: 2.3030
Resistance: 2.3230
Last week's range: 2.3040 - 2.3255
There is certainly no stopping the Euro (EUR) as its climbed further against the New Zealand Dollar extending gains to 2.0300 (0.4925). This is the lowest price in the cross since January 2009. Despite inflation rates around 2.0% and inflation controlled, rising trade uncertainties with US tariffs could throw a spanner in the works with a dovish EUR shift. Diverging central banks should keep the NZD on the back foot for a while longer.
Current Level: 0.4942
Support: 0.4930
Resistance: 0.5000
Last week's range: 0.4923 - 0.4973
Current Level: 2.0234
Support: 2.000
Resistance: 2.0300
Last week's range: 2.0106 - 2.0310
The Australian Dollar (AUD) started the week on the front foot rising to resistance at 0.6630 against the US Dollar (USD) but wasn’t able to hold this level. Into Wednesday the AUD is trading around 0.6580 retracing earlier moves with the US Dollar (USD) strengthening as risk markets wane and the likelihood of US govt shutdowns continue. Later in the week we have Reserve Bank of Australia speeches to provide further insights into the central banks policy and latest inflation data. Also of note Australian consumer confidence has come in light depreciating the AUD.
Current Level: 0.6561
Support: 0.6500
Resistance: 0.6700
Last week's range: 0.6543 - 0.6628
The Bull channel in the Australian Dollar (AUD), USD Dollar (USD) cross set back in April from 0.6330 has held this week as prices pivot around 0.6550 into Friday sessions. The Aussie slipped off 0.6590 as the greenback received support off the back of a risk aversion rebound. Recent Fed minutes suggesting rate cuts later this year seem to have faded reflecting weakness and profit taking in equities. RBA governor Bullock speaks today and may provide fresh clues on monetary policy.
The current interbank midrate is: AUDUSD 0.6557
The interbank range this week has been: AUDUSD 0.6539- 0.6623
Aussie bank holiday Monday saw a slow start to the week in the Australian Dollar (AUD), British Pound 9GBP) cross with high volatility around 0.4905 (2.0380) areas. The GBP looks to make a move higher if we can get a confirm above the 4H price at 2.0410 (0.4900). Recent stronger economic data has led to a slower approach to policy easing by the RBA which has supported the AUD of late. However, with high domestic demand and US tariffs causing a weaker Chinese Yuan support could be capped. Aussie inflation expectations prints this week.
Current Level: 0.4898
Support: 0.4760
Resistance: 0.4930
Last week's range: 0.4880 - 0.4930
Current Level: 2.0416
Support: 2.0280
Resistance: 2.1000
Last week's range: 2.0106 - 2.0310
The ECB president Lagarde spoke this morning saying they are dependant on incoming data to determine the course of rate hikes. The ECB are expecting growth and inflation is consistent with the mid term goal, saying the deflationary process is over. The Euro (EUR), Australian Dollar (AUD) has been locked in a range between 0.5525 (1.8100) and 0.5680 (1.7600) since mid-April. This week we expect the EUR to retest 0.5620 (1.7800) levels the bottom of the recent bear channel.
Current Level: 0.5644
Support: 0.5525
Resistance: 0.5680
Last week's range: 0.5589- 0.5646
Current Level: 1.7717
Support: 1.7600
Resistance: 1.8100
Last week's range: 1.7711 - 1.7892
