• Risk off tone towards the end of the week saw US Equities lose ground, we also had a soft start to the week.
• The NZD has come under fire with the RBNZ Governor Breman pushing back on expectations of rate hikes next year.
• Markets are pricing in 50 points of Fed rate cuts by the end of 2026 with a hold in January.
• Gold holds steady around 4,300 despite ongoing softness in the US Dollar.
• Canadian CPI rose 0.1% in November to hold the annual inflation rate at 2.2%
• Investors expect the Bank of England (BoE) to cut interest rates by 25 points to 3.75% early Friday morning.
• October and November Non-Farm Payroll numbers publish Friday postponed due to recent US Govt shutdowns and will be closely watched as markets continue to assess Fed policy.
• The Euro (EUR) has been the strongest currency over the past week with NZD (NZD) the worst performing on the main board.
The New Zealand Dollar (NZD) has underperformed across the board over the last few days and dropped to 0.5780 levels early Tuesday. RBNZ governor Breman pushed back on expectations of rate hikes in 2026 with a small chance of a rate cut in the near term. She said however, current forecasts indicate the OCR should remain at its current level for some time. Fed policy has moved towards a neutral stance with 2 rate cuts now priced in next year. On the chart we see modest support at the 0.5770 fib line with chances of a retest of the previous high at 0.5830
Current Level: 0.5785
Support: 0.5770
Resistance: 0.5830
Last week's range: 0.5757 - 0.5831
The New Zealand Dollar (NZD) sits just off the weekly open of 0.8735 (1.1450) against the Australian Dollar (AUD) as we kick off Tuesday sessions. Rhetoric from the Reserve bank governor Breman pulling back from rate hikes in 2026 may weigh on the NZD heading into a light calendar week. The only data of note is NZ GDP Thursday with expectations of a rise of 0.8% in the third quarter a stark contrast from second quarter’s -0.9% contraction. The RBA signalling future rate hikes remain more likely than cuts, but with softer employment data markets have pushed back hikes until the second half of 2026. We favour a retest of the previous daily low at 0.8635 (1.1580) this week.
Current Level: 0.8710
Support: 0.8635
Resistance: 0.8765
Last week's range: 0.8683 - 0.8744
Current Level: 1.1473
Support: 1.1410
Resistance: 1.1580
Last week's range: 1.1436 - 1.1516
Risk off markets over the weekend has seen the New Zealand Dollar retreat to 0.4325 (2.3120) heading into Tuesday against the British Pound (GBP). Markets have priced in a 25-point cut Friday morning from the Bank of England (BoE) taking the rate to 3.75%. Markets are also leaning towards 2 further cuts mid next year with recent UKL data supporting this forecast. Any vote split in these decisions could suggest a reluctant sign to easing and may support the GBP. Meanwhile NZ GDP prints Thursday and should come in at 0.8% for the 3rd quarter.
Current Level: 0.4321
Support: 0.4260
Resistance: 0.4350
Last week's range: 0.4326 - 0.4355
Current Level: 2.3142
Support: 2.3000
Resistance: 2.3470
Last week's range: 2.2961 - 2.3111
The Euro (EUR) has extended its run higher against the New Zealand Dollar (NZD) Monday reaching 2.0320 (0.4920) as I write. The Euro has been well supported off the back of Lagarde signalling possible upward revision to 2026 growth forecasts. Markets are expecting the ECB to keep interest rate on hold early Friday at 2.15% with further rhetoric suggesting they will hold right throughout 2026 followed by hikes in 2027. The kiwi may remain under pressure for the rest of the week.
Current Level: 0.4918
Support: 0.4840
Resistance: 0.5000
Last week's range: 0.4933 - 0.4982
Current Level: 2.0333
Support: 2.000
Resistance: 2.0650
Last week's range: 2.0072 - 2.0270
The Australian Dollar (AUD) eased off 0.6660 Monday against the US Dollar (USD) following a risk off weekend tone after the horrific terrorist attack in Sydney. Mixed labour market data has also put the spotlight on the AUD with the jobs market cooling, prompting investors to dial back expectations of RBA interest rate hikes in 2026. It’s a heavy week of economic data with Non-Farm payrolls and US CPI publishing late in the week. The AUD/USD needs a daily close above 0.6650 to signal further upside.
Current Level: 0.6634
Support: 0.6600
Resistance: 0.6700
Last week's range: 0.6607 - 0.6685
Prices in the British Pound (GBP), Australian Dollar (AUD) have continued to improve for the GBP towards 2.0150 as the pair maintains the bull channel from 2.0000 (0.5000) from 10 December. A risk off tone has weakened the Aussie along with a shift away from the RBA raising interest rates next year. The Bank of England (BoE) will cut rates Friday morning to 3.75% but the member vote will be key and tell a story going forward as the how the BoE proceed with easing.
Current Level: 0.4957
Support: 0.4950
Resistance: 0.5000
Last week's range: 0.4959 - 0.5001
Current Level: 2.0173
Support: 2.000
Resistance: 2.0200
Last week's range: 1.9996 - 2.0165
The Australian Dollar (AUD) dropped back from 0.5670 (1.7640) at the weekly open trading into Tuesday around the 0.5650 (1.7700) mark against the Euro (EUR) as the currency extends last week’s gains from the low of 1.7480 (0.5720). The ECB is widely predicted to hold interest rates at 2.15% Friday NZT and may confirm a steady hold phase through 2026. We expect the Aussie to remain under pressure in the near term.
Current Level: 0.5642
Support: 0.5585
Resistance: 0.5715
Last week's range: 0.5653 - 0.5721
Current Level: 1.7720
Support: 1.7500
Resistance: 1.7900
Last week's range: 1.7478 - 1.7688
