• RBNZ cuts the cash rate from 3.25% to 3.0% and signals more cuts to come.
• New Zealand’s Retail Sales climbed 0.5% q/q ending June softening from first quarter’s 0.8% but coming in higher than market expectations of 0.2%. 8 of the 15 retail sectors including electrical goods rose considerably. The worry is clothing and footwear both posted sharp declines.
• DOW rises to an all-time high Friday post Fed Powell speech.
• The greenback was rapidly sold off early Saturday morning NZT after Fed chair Jerome Powell said, “the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.” With sweeping changes in tax, trade, and immigration policies along with achieving lower unemployment Powell will need to cut at the Fed meeting on Sep 18th.
• Barclays expects two rate cuts this year after Powell signalled his easing bias with further moves in 2026 as the bank warns of recession risks under the Trump administration.
• Canada lifts trade tariffs on US imports in efforts to revive talks with US officials.
• As we head into the last few days of August the Japanese Yen (JPY) has been the strongest currency this month with the New Zealand Dollar (NZD) the worst performer on the main board.
The New Zealand Dollar (NZD) extended losses post Wednesday’s RBNZ release. The central bank cut interest rates as widely predicted from 3.25% to 3.0% with a 4-2 vote majority, the NZD/USD falling from around the 0.5900 level to 0.5820 soon after. The cross briefly moved below the 0.5800 mark but ended up consolidating around the 0.5820 area over Thursday. Governor Hawkesby saying although no solid decisions had been made around further cuts, projections are for the cash rate to bottom out at 2.5% with 2 further cuts this October and November.
Currency Level: 0.5850
Support: 0.5815
Resistance: 0.5970
Last week's range: 0.5798 - 0.5942
The New Zealand Dollar (NZD), Australian Dollar (AUD) sits at an early March low this morning, the kiwi continuing to underperform as RBNZ rate cuts start to take hold. We are trading around 0.9025 (1.1079) this morning after starting the week at 0.9050 (1.1050). Last week’s RBNZ rate cut from 3.25% to 3.00% had minor impact as the 0.25% cut was already baked in, it was the statement by governor Hawkesby suggesting possibly another 2 cuts to come this year which sank the NZD off 0.9135 (1.0950). NZ Retail Sales Monday came in miraculously decent at 0.5% for the March quarter above the 0.1% expectation held together by South Island spending. A break below 0.9000 (1.1110) and the cross could target the 3 year long term low at 0.8970 (1.1150).
Currency Level: 0.9021
Support: 0.8970
Resistance: 0.9115
Last week's range: 0.9035- 0.9157
Currency Level: 1.1075
Support: 1.0970
Resistance: 1.1150
Last week's range: 1.0920 - 1.1067
The New Zealand Dollar (NZD) holds around the 0.4345 (2.3000) zone into Tuesday against the British Pound (GBP). The kiwi lost further ground last week coming off 0.4390 (2.2780) at once stage posting 0.4310 (2.3210) a 4-month low in the fallout from the RBNZ cut from 3.25% to 3.00% and governor Hawkesby hinting at 2 more cuts are possible. Meanwhile New Zealand’s Retail Sales climbed 0.5% q/q ending June softening from first quarter’s 0.8% but coming in higher than market expectations of 0.2%. 8 of the 15 retail sectors including electrical goods rose considerably. A retest at 0.4365 (2.29) resistance seems unlikely this week.
Currency Level: 0.4348
Support: 0.4310
Resistance: 0.4400
Last week's range: 0.4307- 0.4392
Currency Level: 2.3004
Support: 2.2740
Resistance: 2.3215
Last week's range: 2.2768 - 2.3213
The New Zealand Dollar (NZD) has recovered losses Monday after falling over 1% last week against the Euro (EUR). The cross trades around 0.5040 (1.9850) and targets last week’s open around 0.5065 (1.9750) this week. The European Central Bank remains cautious holding rates at 2.15% with a “wait and see” approach due to 2.0% inflation and reasonable growth. Also, employment looks resilient with the labour market growing 4.1% since covid days. Downside moves for the kiwi could be limited this week.
Currency Level: 0.5032
Support: 0.5000
Resistance: 0.5115
Last week's range: 0.4992- 0.5088
Currency Level: 1.9872
Support: 1.9560
Resistance: 2.000
Last week's range: 1.9653 - 2.0032
The Australian Dollar (AUD) sank to 0.6415 late last week against the US Dollar (USD) in the lead up to the Jackson Hole Symposium. Fed chair Powell highlighted risk to the jobs market and noted that inflation is still an ongoing threat. The AUD/USD rose sharply to 0.6490 where it closed. Monday’s action showed small losses to 0.6470 before price moved back towards the Friday high. This week’s Australian CPI y/y Wednesday is the main data event with expectations that we should see a rise off 1.9% to 2.3% highlighting the need for the RBA to cut interest rates.
Currency Level: 0.6481
Support: 0.6415
Resistance: 0.6550
Last week's range: 0.5799 - 0.5942
UK inflation grew 3.8% y/y higher than expectations of 3.7% sending the British Pound (GBP) lower off 0.4765 (2.0980) to 0.4790 (2.0890) following the release. The Bank of England (BoE) looks likely to keep the cash rate unchanged this year with chances at 50/50 the central bank will cut at their December meeting. This week’s key data is Australian CPI which is also predicted to rise from 1.9% to 2.3% y/y in July. We may also see the RBA hold rates if this happens at their Sep 30th meeting. The Australian Dollar (AUD) has extended gains Monday trading into Tuesday around the 0.4820 (2.0760) area.
Currency Level: 0.4816
Support: 0.4760
Resistance: 0.4900
Last week's range: 0.4760- 0.4812
Currency Level: 2.0764
Support: 2.0400
Resistance: 2.1000
Last week's range: 2.0778 - 2.1005
The Australian Dollar (AUD) has extended its bull run against the Euro (EUR) Monday after posting 0.5510 (1.8155) mid last week it has clocked 0.5580 (1.7925) in early Tuesday trade. Eurozone wage growth is at 3.95% y/y exceeding ECB forecasts with the central bank officials not expecting further cuts. Lagarde highlighting labour market strength but stressing uncertainties with geopolitical tensions. Meanwhile German business climate improved unexpectedly in August to its highest level in 15 months, but analysts warned the economic outlook remained weak. Retesting the 0.5620 (1.7800) level could be on the cards this week.
Currency Level: 0.5579
Support: 0.5510
Resistance: 0.5620
Last week's range: 0.5508- 0.5580
Currency Level: 1.7924
Support: 1.7800
Resistance: 1.8160
Last week's range: 1.7919 - 1.8155
