• The US Presidents team has expanded the candidate list for the Federal Reserve Chair adding James Bullard and Marc Sumerlin a former Bush advisor.
• UK Retail Sales improved in July driven by warmer weather and higher food prices.
• US Equity Indices close negative on the day.
• Trump has extended the China tariff deadline by 90 days to November 9th. The initial extension was due to expire today.
• Trump will meet with Putin this Friday, Trump saying “I am going to tell him to end the war”. They will also discuss swapping of land.
• Gold dips 1.2% to 3,348.00 as markets eye US CPI and Putin meeting.
• The British Pound (GBP) was the best performing currency last week with the Japanese Yen (JPY) the worst performer on the main board.
The New Zealand Dollar (NZD) extended late Friday’s downside moved off 0.5970 to drift into Tuesday around 0.5930 areas. Investors await news from China/US trade negotiations. Markets remain reasonably calm hoping for a de-escalation of the trade war between the two countries which could boost negative pressure on the kiwi. The main point of contention appears to be restrictions on AI chips to China. Bets are mounting of a rate cut in September when the Fed meet however upside momentum in the NZDUSD seems unlikely given the RBNZ expect to also cut rates next week by 25-50 points.
Current Level: 0.5940
Support: 0.5850
Resistance: 0.6050
Last week's range: 0.5880 - 0.5971
This week’s RBA cash rate cut of 25 points has mostly already been priced into the New Zealand Dollar (NZD), Australian Dollar (AUD) cross. At the last RBA meet we were surprised when the RBA kept rates unchanged siting inflation. Since then, CPI ending June has continued to soften leaving no choice but to cut. We still may get a surprise later today particularly if the statement is more hawkish then markets are anticipating. With the NZDAUD trading at 0.9120 (1.0965) as I write we note the lowest daily close at 0.9110 (1.0975) since April 4 is not far away. A break past this level could see further weakness in the kiwi- if we add in next week’s RBNZ cut to the mix it’s hard to look past a different outcome.
Current Level: 0.9115
Support: 0.9110
Resistance: 0.9175
Last week's range: 0.9107 - 0.9164
Current Level: 1.0966
Support: 1.0900
Resistance: 1.0980
Last week's range: 1.0912 - 1.0980
The New Zealand Dollar (NZD) travelled to the bottom of the long-term support band at 0.4420 (2.2640) this morning extending last week’s losses from 0.4465 (2.2400) levels as the RBNZ look set to cut interest rates next week. The hawkish tone at last week’s Bank of England (BoE) rate cut announcement wasn’t unanimous and is by no means a signal the central bank will be aggressive with their easing policy. Additional cuts we think will depend on incoming data. A break below 0.4415 (2.2650) may leave the kiwi exposed for further downside moves.
Current Level: 0.4420
Support: 0.4420
Resistance: 0.4485
Last week's range: 0.4424 - 0.4461
Current Level: 2.2624
Support: 2.2300
Resistance: 2.2620
Last week's range: 2.2412 - 2.2601
The New Zealand Dollar (NZD) gave up ground early Monday against the Euro (EUR) dropping to 0.5100 (1.9620) before clawing back gains back into Tuesday to 0.5115 (1.9550). Recent ECB news suggests stable inflation but slower growth with tariff risks and geopolitics risks forefront. Upcoming employment data and industrial production should provide further economic insights. Talks by Trump and Putin around a possible ceasefire in Ukraine could strengthen the EUR “lots” with European countries being net importers of energy. We expect the EUR to make gains heading into new week’s RBNZ.
Current Level: 0.5113
Support: 0.5080
Resistance: 0.5180
Last week's range: 0.5082 - 0.5122
Current Level: 1.9557
Support: 1.9300
Resistance: 1.9680
Last week's range: 1.9522 - 1.9677
Markets have priced in a Reserve Bank of Australia (RBA) Cut this week of 25 points from 3.85% to 3.6% supported by recent inflation and labour data showing the economy is on track to recover reasonably well. Housing data remains solid however we are expecting 2 further cuts this year amid global uncertainties. Prices in the cross are around 0.6520 and are not likely to move around much today ahead or the RBA. Tomorrow’s US CPI y/y release is also in focus with chances inflation could rise off 2.7% for July.
Current Level: 0.6515
Support: 0.6420
Resistance: 0.6600
Last week's range: 0.6449 - 0.6540
The Australian Dollar (AUD), British Pound (GBP) consolidates around 0.4850 (2.0620) areas this morning as we await this afternoon’s RBA cash rate release. Markets are widely predicting a cut of 25 points to 3.6% as investors keep a close eye on the policy statement and press conference for updates to economic forecasting. Last week’s Bank of England Cut of 25 points which is the lowest level since March 2023 marked a shift off taming inflation to stimulating growth. However, with the vote being a close call, policy makers are not in a hurry to deliver further easing.
Current Level: 0.4849
Support: 0.4760
Resistance: 0.4900
Last week's range: 0.4838- 0.4889
Current Level: 2.0622
Support: 2.0400
Resistance: 2.1000
Last week's range: 2.0453 - 2.0666
The Australian Dollar (AUD) started the week poor dropping to 0.5585 (1.7900) numbers against the Euro (EUR) but was well supported into Tuesday, the cross trading back at 0.5610 (1.7820) as we head into RBA later today. With a cut priced in by the RBA to 3.60% from 3.85% we could still see sellers of AUD come through if the statement is dovish. Expectations are for the ECB to hold interest rates in September which may increase EUR support as we see central bank divergence.
Current Level: 0.5608
Support: 0.5545
Resistance: 0.5650
Last week's range: 0.5572 - 0.5611
Current Level: 1.7831
Support: 1.7700
Resistance: 1.8040
Last week's range: 1.7820 - 1.7944
