It appears that a solution to the US Government shutdown is drawing near and this will relieve markets, as uncertainty is death. The other major reason is that market operation is fed on a daily diet of Government data/statistics and this has been absent for some time. Markets would like to get a firm grasp on the US labour market, inflation and other key drivers. This will return, with the Government, for better or worse.
Weak economic conditions prevail in NZ and this has driven the RBNZ to slash interest rates, in an effort to stimulate the severely underperforming economy. The cut in interest rates have impacted the attraction of the KIWI, with interest rate differentials widening, taking their toll on the currency. The NZD has slumped back towards 0.5600, with more likely downside expected.
Current Level: 0.5640
Support: 0.5500
Resistance: 0.5800
Last week's range: 0.5603 - 0.5671
This week has been dominated by the reopening of the record US Government shutdown, which created some confidence in markets. The improvement in market sentiment allowed the safety of the US Dollar flows to weaken and an incremental recovery of currencies. The NZD was able to regain 0.5650, slowly improving, but with critical economic fundamentals undermining any sustained recovery.
The current interbank midrate is: NZDUSD .5647
The collapse in the AUD/NZD cross rate has continued, with momentum gathering. The cross rate is charging back towards 0.8600, searching for recent and long term historical lows. Trading consistently down below these levels is record territory and brings massive recalculations into play. The RBA decision to hold rates, at their last meeting, has only added fuel to the fire.
Current Level: 0.8635
Support: 0.8600
Resistance: 0.8900
Last week's range: 0.8627 - 0.8715
The collapse in the NZD/AUD cross rate has been monumental and historical. The lows achieved have not been seen since the fallout post GFC. The cross rate has managed to bounce off 0.8600, but this may be a ‘dead-cat bounce’. NZ economic fundamentals remain challenging, while the interest rate differentials between the two countries, ensure flows will continue across the Tasman.
The current interbank midrate is: NZDAUD .8650 AUDNZD 1.1540
The interbank range this week has been: NZDAUD .8608 - .8675 AUDNZD 1.1486 - 1.1615
Current Level: 1.1581
Support: 1.1300
Resistance: 1.1700
Last week's range: 1.1475 - 1.1589
The prevailing driver of NZD cross rates is the inglorious collapse of the NZD. The RBNZ has sought to inject some enthusiasm into the economy with monetary stimulus, cutting rates. This may well play out, over the medium term, but in the short term it has cut the legs out of the KIWI. The NZD/GBP cross rate has slumped below 0.4300. The slow-motion train wreck that is the UK economy may be the only saviour.
Current Level: 0.4286
Support: 0.4200
Resistance: 0.4500
Last week's range: 0.4264 - 0.4341
The NZD/GBP cross rate remains around lows below 0.4300, humbled by the devastated performance, of the NZ Dollar. The UK has critical and existential economic, fiscal and monetary problems, which could flip this cross rate on its proverbial head. If the looming UK budget fails to deliver, there could be mayhem in the British bond and currency markets.
The current interbank midrate is: NZDGBP .4285 GBPNZD 2.3230
The interbank range this week has been: NZDGBP .4262 - .4320 GBPNZD 2.3146 - 2.3437
Current Level: 2.3332
Support: 2.2220
Resistance: 2.3809
Last week's range: 2.3036 - 2.3452
The EUR has recovered some lost ground against the US Dollar, but the precipitous slide in the NZ Dollar has accentuated the cross rate. The NZD/EUR has crashed below 0.4900 and this collapse looks likely to continue. This is great for exports, but large rises in import prices will drive inflation and hit consumers hard.
Current Level: 0.4882
Support: 0.4800
Resistance: 0.5000
Last week's range: 0.4843 - 0.4932
The EUR has stabilised, once again, against the US Dollar. The directional flows, in the NZD/EUR cross rate, are coming from the severely diminished KIWI currency. The cross rate has crashed below 0.4900 and the slaughter looks likely to continue. Expect all influence on this cross rate to come from the NZD.
The current interbank midrate is: NZDEUR .4860 EURNZD 2.0550
The interbank range this week has been: NZDEUR .4849 - .4894 EURNZD 2.0432 - 2.0618
Current Level: 2.0483
Support: 2.0200
Resistance: 2.0850
Last week's range: 2.0275 - 2.0648
The RBA’s decision to hold rates at their last meeting, due to surging inflationary pressures, only serves to prove Australia is not out of the inflationary cycle yet. This means some tough times ahead for borrowers and thus consumers. This did add some backbone to the AUD, which regained 0.6500, but global uncertainty has hammered confidence.
Current Level: 0.6530
Support: 0.6400
Resistance: 0.6600
Last week's range: 0.6456 - 0.6537
Australian economic data has been underperforming for some time, while inflation has reignited in recent times, hampering the RBA’s ability to provide monetary stimulus. The latest employment data, out in Australia, was much better than expected, with the headline rate falling from 4.3% to 4.1%. This was a relief and a welcome boon to the currency, which looks to regain 0.6550.
The current interbank midrate is: AUDUSD .6533
The interbank range this week has been: AUDUSD .6472 - .6579
The AUD/GBP cross rate has retreated from the 0.5000 mark, sliding back towards 0.4950, as the GBP consolidates. The looming UK budget is likely to determine the near-term prospects of the GBP and thus the cross rates. If markets reject the UK Government budget, we could see turmoil in both the British bond and currency markets.
Current Level: 0.4962
Support: 0.4900
Resistance: 0.5100
Last week's range: 0.4915 - 0.4990
The US Government is set to reopen, so markets will keenly await the restoration of US economic data. UK growth data was weak, confirming the serious economic crises evolving. UK Manufacturing and Industrial Production are in a state of collapse, driven by the highest energy prices in the G20. The pending UK budget is the critical determinant in the space, while the AUD/GBP cross tests 0.4900.
The current interbank midrate is: AUDGBP .4949 GBPAUD 2.0201
The interbank range this week has been: AUDGBP .4918 - .5003 GBPAUD 1.9984 - 2.0328
Current Level: 2.0153
Support: 2.0408
Resistance: 1.9607
Last week's range: 2.0040 - 2.0345
The possible end to the Government shutdown in the US, has removed the upward pressure on the US Dollar, as a safety play. This has enabled a recovery in the EURO, which has impacted the cross with the lethargic AUD. The cross rate slipped back toward 0.5650, as markets watch the return, to a fully functional US Government.
Current Level: 0.5653
Support: 0.5500
Resistance: 0.5700
Last week's range: 0.5586 - 0.5669
The EUR has managed to reclaim some lost ground, following the end to the record US Government shutdown. This coincides with the recovery in the AUD so the cross rate is now trading around .5600. Economic conditions look settled in Europe, while Australian markets do seem much more nervous, so expect fluctuations in the cross to come from the AUD.
The current interbank midrate is: AUDEUR .5614 EURAUD 1.7750
The interbank range this week has been: AUDEUR .5592 - .5662 EURAUD 1.7659 - 1.7879
Current Level: 1.7689
Support: 1.7543
Resistance: 1.8181
Last week's range: 1.7639 - 1.7902
