Risk sentiment improved over the weekend when positive comments came out of meetings between US negotiators and Chinese officials; NZD started the week well peaking at 0.6827 USD; NZDAUD pair opened the week around 0.9610

NZD/USD

Risk sentiment improved over the weekend when positive comments came out of meetings between US negotiators and Chinese officials regarding a trade truce for now as Trump halted ramping up tariffs on 200 Billion worth of Chinese products. The New Zealand Dollar started the week well peaking at 0.6827 before easing back slightly after equity markets all printed down on the day. A very quiet week for the kiwi should see the currency pushed around a bit via offshore influences before (NFP) Non Farm Payroll prints later in the week. 185k is the number we are expecting to be added to the US workforce - can they go three positive months in a row which has not been done since January 2016. A number of Fed officials will take to the stage as well as the chairman Powell to discuss and review monetary policy. We think the kiwi could go higher this week following on with its recent series of higher lows and higher highs.

NZD/AUD (AUD/NZD)

The Australian Dollar (AUD), New Zealand Dollar (NZD) pair opened the week around 0.9610 (1.0410) with the Aussie Building approvals and Business operating profits coming in poor taking price to 0.9620 (1.0395) Tuesday.  The RBA will announce their Cash rate today at 4.30 NZT widely expected to stay at 1.50% with prospects governor Lowe could be dovish if recent data is to go off. For months now we have been talking down the pair back to 0.9000 but with things starting to look shabby in the Australian economy we think price could go back above 0.9700 (1.0310) happily if further weakness is seen in data results. It’s a slow week for the kiwi with nothing on the NZ calendar so past today’s RBA we have Australian quarterly GDP and Retail Sales to digest.

NZD/GBP (GBP/NZD)

The New Zealand Dollar (NZD), British Pound (GBP) is making moves to the topside this week after reaching 0.5130 (1.9490) Monday. Generally the Pound has been weaker against the US Dollar even though Trump complaints that its to high. Bank of England (BoE) Carney speaks tomorrow before the House of Lords before members Saunders, Cunliffe and Tenreyro Thursday. No doubt we could see pressure put on the Pound with a possible retest of 0.5200 (1.9240). Current price is bang on 50% retracement and a key fibonacci level of the current 0.5180 (1.9315) from the October 2018 low of 0.4890 (2.0460) and the high of 12 December 2018 at 0.5520 (1.8120). We have often seen the continuation of the original trend develop with this pattern.

 NZD/CAD

Choppy movement in the New Zealand Dollar (NZD), Canadian Dollar (CAD) pair took price from support around 0.8950 late last week back to 0.9080 Tuesday. The cross continues to stay within the range of 0.8900 - 0.9120 over 2019 which suggests we are fairly toppy currently towards the top of the band. No news this week for the kiwi just Bank of Canada (BoC) Cash rate Thursday which is not expected to throw up any surprises. 1.75% will stay unchanged for now with markets focused on remarks from governor Poloz as to monetary direction for 2019. We favour price easing back to 0.9000 this week.

NZD/EURO (EURO/NZD)

The New Zealand Dollar (NZD), Euro (EUR) remains forever choppy pivoting off around 0.6030 (1.6590) over the past five weeks and trading at 0.6020 (1.6610) Tuesday. Friday’s ECB Cash rate announcement is the only significant data on the docket this week with Draghi expected to continue his recent gloomy theme on growth if the minutes of the January ECB meeting are anything to go off. The cross will drift around current levels for a while but expect 0.6000 (1.6600) to hold this week on global risk factors

NZD/YEN

The New Zealand Dollar (NZD) gaped higher against the Japanese Yen (JPY) on the weekly open to 76.40 levels but dropped lower as equity markets and sentiment deteriorated. The yearly theme is still bullish for the cross but for now over the coming week we will see price bounce around the 76.00 mark with no data on the calendar. Risk appetite will could play a part if investors grow further confidence that a US and China deal can be reached.

AUD/USD

The Australian Dollar (AUD) opened higher Monday to 0.7100 against the US Dollar (USD) after optimism surrounding recent talks between US officials and Chinese negotiators. News of trade progress boosted Oil prices and equity markets assisted risk associated currencies. It’s a busy week of data for both currencies on the calendar with RBA to announce their cash rate later today. The RBA will no doubt leave rates unchanged at the historical low of 1.50% but comments around the falling housing market could get attention after Building Approval figures have been poor over the last 4 months. Later in the week Non-farm Payroll prints along with US Unemployment which is expected to print lower back to 3.9%. Price movement this week should hold 0.7000 with decent support around 0.7060.

AUD/GBP (GBP/AUD) 

Figures showed Australian Building approval printed up 2.5% for the month of January stopping the rot settle in the Australian Dollar (AUD). Overall this is a decline of over 25% in the last three months of 2018. The British Pound (GBP) was expected to start the week on the backfoot after the recent surge from of last week from 0.5470 (1.8280) but this hasn’t eventuated yet with price coming off the low of 0.5340 (1.8720) (the 25 month low) to 0.5380 (1.8580) Tuesday. The RBA Cash will be announced today and will remain at its record low of 1.50% for a while longer. Look out for market moving quarterly GDP tomorrow.

AUD/EURO (EURO/AUD)

The Australian Dollar has surprisingly picked up a little momentum after yesterday’s terrible Building Approvals figures against the Euro (EUR) trading off the low of 0.6220 (1.6070) to 0.6280 (1.5980). Building approvals although slightly better than predicted are now down over 28% year on year which is extremely concerning. Soft Business operating profits also put pressure on the Aussie pointing to further downside risks in the currency heading into today’s RBA cash rate announcement. No change is expected from the 1.50% for now but comments by Lowe will be interesting. Later in the week we also have the (ECB) European Central Bank cash rate announcement which will remain at 0.0% as they have nowhere to go, comments will more than likely be dovish based on recent data indicating the economy in the region is slowing.

AUD/YEN

Since early February we have seen a series of higher lows and higher highs in the Australian Dollar (AUD), Japanese Yen (JPY) pair. We have been following a bullish channel with price currently at the bottom of this around 79.25 Tuesday lunch. The pattern observes the need for positive Australian Data this week after a shaky start with Building approvals and Business operating profits printing weak. Today’s RBA cash rate announcement holds the key as investors look for dovish comments, which could put additional pressure on the AUD before quarterly GDP and Retail Sales later in the week. If price breaks below 79.00 support we could see the pair drop further.

AUD/CAD

Surprisingly with all the Australian Dollar weakness of late the Aussie (AUD) has extended its bull run from last week’s low of 0.9310 against the Canadian Dollar (CAD) as troubles brew for the CAD. Late last week’s string of poor Canadian data bought back bears into the close with price closing at 0.9410 and up towards 0.9440 Tuesday. The crude oil rally to 57.00 came to an end with price easing back to 56.40 along with equities also closing weaker. 0.9470 acts as staunch resistance with expectations price will drift off for the rest of the week. RBA today who will more than likely be dovish along with recent crappy data.

-------------------------------------------------------------------------------------------------------------

To subscribe to our free daily Currency Rate Sheet and News email, enter your email address here.

--------------------------------------------------------------------------------------------------------------------------

Australia

Weekend news following the Trump/China trade talks was positive with Trump formally taking the 1 March increase to 200 million of Chinese worth of products off the table. Investors bought risk currencies with the Aussie gaping higher to 0.7100 from 0.7075 on the weekly open. It’s a big week of data for the Australian currency starting with building approvals and Company operating profits printing Monday. Building approvals has come in at 2.5% from the expected 1.5% which is clearly better than the past two months of data which were down 9.85% and 8.4% but its the year on year figure which has us concerned down 28.9% from January 2018. Company operating profits were also a miss with 0.8% q/q after 3.0% was expected, significantly down on the December quarter showing worried strain to Australian businesses. The AUD fell across the board on the combined news back to 0.7080 versus the big dollar. The RBA will announce their benchmark cash rate today at 4.30 NZT with no expected change to the 1.5%. Comments by Lowe will be keenly analysed after recent banks have forecast at least one rate cut later this year. I suspect that if the property market devalues much lower we could see an intervention sooner by the RBA.

New Zealand

ANZ Business confidence Friday came in worse than expected with a net 30.9 % of businesses expecting the economy to perform poorly over the remainder of 2019. The New Zealand Dollar was slightly weaker on the news trading down to 0.6800 against the US Dollar after the news. Earlier Trade Balance printed at -914 million which showed the weakest January number since records began. Dairy Farmers received mixed news when Fonterra increased the milk solid price to a range of $6.30- $6.60 per kg from $6.00 - $6.30 but dropped the earnings forecast. As all dairy farmers who shop through Fonterra have a share in Fonterra the lower share earning of 15c to 25c from 25 to 35c is a real kick in the teeth for farmers. Hurrell the chief executive said - the business is not where it needs to be. We have a light economic calendar this week so offshore factors will drive the kiwi.

United States

It was take two for Kim Jun Un and President Trump at the Vietnam summit when they met again over the prior weekend. President Trump's hopes were at normal optimistic levels to get a deal done and silence his critics but by late last week it was apparent things were not going quite to plan. A rescheduled press conference confirmed what we expected - the talks had fallen short. Trump saying "sometimes you have to walk, and this was one of those times". Talk of "easing sanctions" in North Korea was Trump’s objective but somehow this got lost in translation as Un and North Korea were asking for ALL sanctions to be lifted. Walking away from the summit was better than making a terrible deal. The trade tariff truce was formally extended with tariffs on Chinese imports to be increased to 25% from 10% on 1 March. Trump has demanded all tariffs on US agricultural products be removed as the Chinese offered to purchase an additional 1.2 trillion in US products. As part of a long term deal China have offered to lower tariffs on US farm, chemical, auto and other products. US data Friday pegged back some of the positive trade discussions with manufacturing data falling from 54.2 to 56.6 in January and UoM consumer confidence also below the expected 95.8 to 93.8. This week we have the all important (NFP) Non-Farm Payroll release and unemployment.

Europe

The Euro traded higher last week against all the major pairs except the surging Pound. Making up 1.5% against the Canadian Dollar. This week we have seen a different story with the Euro dropping out of favour down 0.60% against the kiwi. European equity markets have also booked losses in the early stages of the week, leading the way was the FTSE closing down 0.36%. The benchmark 10 year treasury notes yields of all the major European countries are also lower on the day adding to EUR stresses. The main news this week is the ECB- European Central Bank’s Cash rate which will remain at 0.0% again based on the deceleration of growth and benign inflation numbers. Investors will also be watching for economic forecasts and long term insights from Mario Draghi.

United Kingdom

The English Pound had a positive week pushing higher from 1.3000 levels to 1.3350 against the greenback before easing back. The last time we saw price at 1.3350 was October 2018. Despite poor data, optimism around news that PM Theresa May has enough support to win the next parliament vote supported the currency. The 29th March exit date from the EU looks in jeopardy if parliament rejects Prime Minister May's vote late this month. May has said she will bring back a revised deal to parliament by the 12th of March. If he deal is rejected parliament will be given a new opportunity to vote to either leave the EU or extend the Article 50 negotiating period. Bank of England (BoE) governor Carney speaks tomorrow, apart from this its a quiet week on the docket for the Pound.

Japan

The US Dollar /Japanese Yen rate is sitting at a 10 week high the as the Japanese Yen remains bearish.  The US Dollar was supported with GDP growing by an annual 2.6% for the fourth quarter - exceeding forecasts by 2.3%. Japanese Retail Sales y/y came in poor at 0.6% based on predictions of 1.4% as well as Housing starts at 1.1% after 10.4% was expected, the numbers showing a significant downturn in property. Japan's unemployment rate jumped to 2.5% in December from 2.4% while the availability of jobs remained steady.  Birhanu Legese of Ethiopia has won the Tokyo marathon on Sunday in a time of 2:04 it was his first marathon win. Japanese quarterly GDP prints this week and is expected to come in at 0.4%.

Canada

This week sees the Bank of Canada (BoC) rate decision on Thursday 7th. Predictions are increasing for the central bank to start shifting their over positive stance on monetary policy to a more dovish position. Recently the bank has been stubborn to speak around not so flash recent negative economic data. Perhaps this week we could see a surprise drop to the current 1.75% but chances are small. Last week’s CPI came in soft at 0.1% instead of the 0.2% expected while the Current Account was also down on expectation at -15.5B based on predictions of -13.4B. Fridays' monthly CPI printed light at -0.1% after 0.0% was predicted. The terrible data sent the CAD well lower on bearish sentiment, against the Dollar it was off 150 points to 1.3300 over 1.0%. The only thing saving the Canadian Dollar at the moment is the bullish Crude Oil but how OPEC can't push up prices forever. Price which Besides the BoC overnight rate announcement we will also be watching employment data later in the week.

-----------------------------