• Forecasting is now predicting the RBNZ to cut 50 points at their October meeting and again by 25 points at the November meeting. This will take the Cash Rate to 2.25% at year end. There is also a chance the RBNZ may need to cut again to 2.0% if the economy doesn’t respond to the ongoing recession.
• Fed’s Miran spoke this morning and said he thinks the cash rate is 200 points to high. He wants to cut rates to strengthen employment and decrease inflation.
• Australian RBA governor Bullock says the Australian economy has room to move if the global economy takes a turn for the worst.
• Equities resumed their upward momentum Monday retesting record highs.
• The Bank of Japan (BoJ) kept their cash rate unchanged at 0.5%.
• Gold has clocked a fresh all-time high of 3,747 per ounce rallying 1.6% Monday.
• The Euro (EUR) is the strongest currency in the past week while the New Zealand Dollar (NZD) is the weakest performer on the main board.
The New Zealand Dollar (NZD) continues to be weighed down by US Dollar (USD) strength and prospects of further rate cuts. The kiwi touched 0.5840 Monday before recovering slightly into Tuesday markets to 0.5865. Long term support at 0.5800 looks in jeopardy, the April 2025 low. Past this point support sits at the yearly low at 0.5480. Pressure remains to the downside with US Final GDP q/q incoming Friday.
Current Level: 0.5863
Support: 0.5830
Resistance: 0.6000
Last week's range: 0.5853 - 0.6006
NZD/USD pair this week:
The New Zealand Dollar (NZD) has dropped through 0.5815 support this morning during NY session against the US Dollar (USD) posting 0.5760 a fresh low where it currency resides. Final US GDP q/q and unemployment claims both came in better than expected sending the USD higher. GDP printed at 3.8% compared to the 3.3% markets were expecting offering fresh questions around whether the fed may dial back its aggressive cutting campaign. The 2025 low sits around the 0.5490 level, so we still have a way to go to retest this area, with 75 points to 1.0% of RBNZ rate cuts to come it’s hard to see upside developing for the mighty kiwi.
The Australian Dollar (AUD), New Zealand Dollar (NZD) has posted a new October 2022 low of 0.8865 (1.1280), the AUD extending its run higher over the past week in a world of diverging central banks, while the RBNZ is forced to keep cutting the RBA- not so much. It’s tough to see much of a retracement by the kiwi in the near to medium term suggesting current levels could be decent buying of AUD looking forward. Data in the cross this week comes in the form of Australian CPI y/y- expected to rise off 2.8%.
Current Level: 0.8885
Support: 0.8810
Resistance: 0.8950
Last week's range: 1.1131 - 1.1278
NZD/AUD pair this week:
The New Zealand Dollar (NZD), Australian Dollar (AUD) printed 0.8812 (1.1348) this morning a new early October 2022 low. Australian CPI y/y for August came in at 3.0% up on economists’ forecasts of 2.9% and higher than the July’s 2.8%, the figure is right at the top of the RBA’s 2-3% target supporting the case for interest rates to remain on hold for a while longer. The next point of concern on the chart is the support at 0.8710 (1.1485), any breakthrough this level and we are into early 2015 prices. On next week’s economic docket is the RBA cash rate with no reductions from 3.60% predicted.
Current Level: 1.1243
Support: 1.1170
Resistance: 1.1350
Last week's range: 0.8866 - 0.8983
Last week’s gains by the British Pound (GBP) saw the currency erase 3 weeks of losses against the New Zealand Dollar (NZD) off 2.2740 (0.4400) areas to 2.3140 (0.4320). Early Tuesday prices are around 0.4340 (2.3030) as it consolidates around 4-week lows. On the economic docket this week is UK Manufacturing tonight expected to come in soft and possibly weaken the Pound.
Current Level: 0.4338
Support: 0.4320
Resistance: 0.4370
Last week's range: 0.4300 - 0.4395
Current Level: 2.3052
Support: 2.2880
Resistance: 2.3150
Last week's range: 2.2753 - 2.3148
The New Zealand Dollar (NZD) has been “massacred” by the Euro (EUR) over the past 7 days of trading. We did have a run of NZD strength on the rebound to 0.5100 (1.9620) but the kiwi has not been able to hold this area. NZ GDP put a stop to any momentum the kiwi had when the release printed at -0.9% vs -0.3%. The NZD run down to 0.4970 (2.0110) has not entirely been unexpected. Eurozone manufacturing and German business climate prints tonight and may strengthen the Euro further.
Current Level: 0.4969
Support: 0.4950
Resistance: 0.5000
Last week's range: 0.4976 - 0.5085
Current Level: 2.0124
Support: 2.000
Resistance: 2.0200
Last week's range: 1.9664 - 2.0093
The Australian Dollar (AUD) sits around 0.6590 against the US Dollar (USD) in early Tuesday consolidating just above the fortnightly low. The AUD has outperformed most main board currencies over the last 4 weeks mainly based on central bank rhetoric. Governor Bullock saying the Australian economy is performing as expected with inflation within the 2-3% target and employment near full capacity. Markets are predicting a November rate cut as the labour market looks to soften over the coming months. We expect the AUD to reverse north off 0.6600 post today’s liquidity clear out.
Current Level: 0.6597
Support: 0.6550
Resistance: 0.6680
Last week's range: 0.6585- 0.6706
AUD/USD pair this week:
The Australian Dollar (AUD) extended declines overnight dropping to 0.6530 against the US Dollar (USD) Thursday showing the biggest daily slide since the last week of July and the lowest level since September 5th. At the moment markets have a November rate cut baked into forecasts. Governor Bullock saying the Australian economy is performing as expected with inflation within the 2-3% target and employment near full capacity. Certainly, with Australian CPI coming in at 3.0% the RBA won’t be rushing to change a balanced easing approach.
The Australian Dollar (AUD) broke below its 5-week bull run channel against the British Pound (GBP) mid last week posting a daily close at 0.4885 (2.0475) from the high of 0.4915 (2.0350). We will get a look in the next few hours as to whether price retraces to 0.4840 (2.0650) on the downside. Markets await Wednesday’s Australian CPI y/y release, expected to come in at 2.9% which could be to close for comfort for the RBA, reinforcing a rate cut late in the year.
Current Level: 0.4881
Support: 0.4835
Resistance: 0.4915
Last week's range: 0.4866 - 0.4913
Current Level: 2.0487
Support: 2.0350
Resistance: 2.0680
Last week's range: 2.0353 - 2.0550
The Euro (EUR) is keen to get on with it this week extending its bull run against the Australian Dollar (AUD) to 1.7880 (0.5590) off 1.7780 (0.5625) the cross sitting around 3-week lows. Governor Bullock spoke yesterday noting the Australian economy is performing as expected coming into the third quarter close with focus on a November meeting rate cut. Meanwhile the ECB has cautiously maintained its 2.0% rate awaiting December’s incoming data to evaluate. Support lies at 0.5525 (1.8100) on the chart, we see chances of a possible retest of this area.
Current Level: 0.5590
Support: 0.5525
Resistance: 0.5680
Last week's range: 0.5600 - 0.5681
Current Level: 1.7889
Support: 1.7600
Resistance: 1.8100
Last week's range: 1.7600 - 1.7860
