Lack of data last week on the NZD calendar has seen the currency push higher on general USD weakness to 0.6875, before easing back slightly; AUDNZD pair is still trending higher

Lack of data last week on the NZD calendar has seen the currency push higher on general USD weakness to 0.6875, before easing back slightly; AUDNZD pair is still trending higher

By Neven Fisher*:

Major Announcements last week:

  • US Retail Sales prints up at 0.2% from 0.0 expected
  • UK GBP m/m comes in at 0.5% from 0.2% expected
  • Brexit still hangs in the balance after 3 parliamentary votes
  • US Durable Goods prints down at -0.1% after 0.1% expected
  • Bank of Japam keep overnight rate unchanged
  • Crude Oil spikes above 59.00 per barrel
  • NZ Westpac Consumer sentiment prints benign at 103.8

NZD/USD

A lack of data last week on the New Zealand Dollar (NZD) calendar has seen the currency push higher on general US Dollar (USD) weakness to 0.6875, before easing back slightly. We will see more Fed policy speak Thursday when Fed chairman Powell leaves the federal funds rate at 2.50% and talks about a cautious approach to raising rates, pointing to the govt shutdown and financial market uncertainty as the reasons for possibly not hiking again in 2019. NZ quarterly GDP is expected to come in at 0.6% on Thursday’s reading and should bring a rise from the December quarter’s 0.3%. The kiwi looks capped at 0.6900 with risks skewed to the downside.

DIRECT FX Current level Support Resistance Last wk range
NZD/USD 0.6845 0.6800 0.6910 0.6808 - 0.6873

NZD/AUD (AUD/NZD)

While the big picture theme in the Australian Dollar (AUD), New Zealand Dollar (NZD) pair is still trending higher, the price has edged lower back to 0.9645 (1.0368) Tuesday. Last week the cross reached a high of 0.9715 (1.0293) a yearly high. This morning Westpac consumer sentiment printed slightly worse than markets were expecting at 103.8 as NZ consumers are concerned about the economic outlook. This is the lowest level reading since 2008. Thursdays NZ GDP and Friday’s Aussie job’s number holds the key to direction. We suspect a retest of last week’s level is a reasonable probability.

DIRECT FX Current level Support Resistance Last wk range
NZD / AUD 0.9644 0.9590 0.9715 0.9640 - 0.9715
AUD / NZD 1.0367 1.0295 1.0430 1.0294 - 1.0373

NZD/GBP (GBP/NZD)

The New Zealand Dollar (NZD) moved higher off this week’s open reaching 0.5200 (1.9230) early Tuesday against the British Pound (GBP) before easing back to 0.5168 (1.9350). The Pound will get most of the attention again this week with another vote by MP’s on whether to accept Theresa May’s rehashed deal. The speaker of the house Bercow has said he will rule out the 3rd vote unless the deal is considerably different to the last one rejected last week. Theresa May has cautioned this week’s vote may be delayed to give her more time to prepare. With good chances of a deal being done this has held the Pound up at reasonable levels, should we get a scenario where things turn ugly we will see the GBP depreciate wildly below 0.5000 (2.0000).

DIRECT FX Current level Support Resistance Last wk range
NZD / GBP 0.5158 0.5120 0.5265 0.5127 - 0.5263
GBP / NZD 1.9387 1.9000 1.9540 1.9001 - 1.9506

 NZD/CAD

The New Zealand Dollar (NZD) closed the week where it left off against the Canadian Dollar (CAD) around the 0.9130 area after a turbulent few days. Upward pressures on Crude Oil has seen the CAD bounce back in favour across the board as price reaches 59.20 the highest price since November last year. Opec production cuts and a rising China-US dispute should see price track higher lifting the CAD further. NZ GDP followed by CAD monthly CPI and Retail Sales are the highlights on the calendar this week. We expect a retracement to the previous weeks level of 0.9070 on the horizon.

DIRECT FX Current level Support Resistance Last wk range
NZD / CAD 0.9133 0.9070 0.9200 0.9076 - 0.9197

NZD/EURO (EURO/NZD)

With Brexit making most of the headlines, the Euro (EUR) has sat on the sidelines. Last week’s very light economic data had something to do with it, with nothing releasing of note. The Euro has held up well versus the New Zealand Dollar (NZD) on dips to 0.6100 (1.6400) over the last five week or so with price currently trading around the 0.6040 (1.6550) mark. Westpac consumer sentiment released at 103.8 for the previous quarter but just shy of the December reading of 109.1, showing reasonable optimism. Tomorrow’s NZ Current Account will hold attention followed by Thursday’s quarterly GDP. The December quarter reading of 0.3% less than the 0.6% markets were expecting put pressure on the kiwi and moved the price considerably. This one could do the same if the print is less than 0.6%. Later in the week we have a French and German manufacturing figures.

DIRECT FX Current level Support Resistance Last wk range
NZD/EUR 0.6039 0.5980 0.6100 0.6025 - 0.6096
EUR/NZD 1.6559 1.6400 1.6720 1.6405 - 1.6598

NZD/YEN

The New Zealand Dollar (NZD) extended last week’s bullish theme against the Japanese Yen (JPY) travelling to a new high of 76.66 Monday before easing back to 76.30. With no data on the table last week the kiwi climbed higher on risk factors - Brexit mainly and a fresh appetite for equities. Westpac Consumer Sentiment came in a little lighter than predicted at 103.8 but still shows a relatively optimistic economy ahead although households have become concerned about their personal financial situation. Japanese Bank holiday Thursday.

DIRECT FX Current level Support Resistance Last wk range
NZD / YEN 76.17 75.30 76.60 75.93 - 76.66

AUD/USD

Massive support at 0.7000 held last week in the Australian Dollar (AUD), US Dollar (USD) pair with price travelled back through 0.7100 Tuesday reaching a high of 0.7115. Risk sentiment has been better with the US-China trade war showing signs of easing. The next meeting is planned for April but it’s reported that the leaders could meet up in late March. If we see positive developments arise we can expect risk appetite to sour which is good news for the Aussie Dollar. Today’s Monetary policy minutes and jobs data could throw up some surprises with Canadian CPI and Retail Sales prints Saturday.

DIRECT FX Current level Support Resistance Last wk range
AUD / USD 0.7098 0.7040 0.7120 0.7042 - 0.7115

AUD/GBP (GBP/AUD) 

Amid the recent slew of Australian data the British Pound reached a multi year high against the Australian Dollar (AUD) when it reached 0.5300 (1.8860) late last week. With the Pound finding support around current levels the last time we saw price this low was the day of the Brexit referendum - 24th June 2016. The AUD has opened the week well pushing higher off the open to 0.5360 (1.8650) as the Aussie looks to recoup some of the large yearly losses.  The Pound will get most of the attention again this week with another vote by MP’s on whether to accept Theresa May’s rehashed deal. The speaker of the house Bercow has said he will rule out the 3rd vote unless the deal is considerably different to the last one rejected last week. Theresa May has cautioned this week’s vote may be delayed to give her more time to prepare. We have a massive amount of data to publish this week in the cross starting with monetary policy minutes today, Aussie jobs data and Bank of England official cash rate but a few.

DIRECT FX Current level Support Resistance Last wk range
AUD / GBP 0.5349 0.5300 0.5435 0.5302 - 0.5433
GBP / AUD 1.8695 1.8400 1.8870 1.8405 - 1.8862

AUD/EURO (EURO/AUD)

It’s a massive week on the economic docket for the Australian Dollar (AUD), Euro (EUR) pair after nothing printing last week of note left the cross bouncing around 0.6265 (1.5960). RBA Monetary policy minutes from the 5th March meeting release today and should highlight the earlier spiel from governor Lowe of signs the economy is struggling but unemployment will continue to edge lower to 4.75%. We will see if this happens Thursday when the jobs data releases and the unemployment rate. Later in the week German and French manufacturing figures release. The Euro will be boosted by Brexit optimism this week if a deal can be agreed but more predominantly if Aussie jobs data comes in well we could see a retest of the 3 month high of 0.6350 (1.5740) develop.

DIRECT FX Current level Support Resistance Last wk range
AUD/EUR 0.6261 0.6230 0.6290 0.6228 - 0.6291
EUR/AUD 1.5971 1.5900 1.6060 1.5895 - 1.6056

AUD/YEN

The Australian Dollar (AUD) reversed off the 77.70 low last week to push back to 79.50 against the Japanese Yen (JPY). Monetary policy minutes release today as well as the HPI- House Price Index with both expected to reflect the recent dire themes ahead of Aussie jobs numbers. The RBA have recently talked up job growth and low unemployment- we shall see. Japanese Bank holiday Thursday with Vernal Equinox Day. Risk sentiment could also play a part shifting markets with another Brexit vote to take place Wednesday.

DIRECT FX Current level Support Resistance Last wk range
AUD/YEN 78.99 78.30 79.40 78.37 - 79.41

AUD/CAD

Despite recent strong employment data the Canadian Dollar (CAD) has struggled to gain any momentum over the past three weeks of trading. Last week the Australian Dollar continued its bullish run higher to 0.9450 and Tuesday 0.9470. Crude Oil prices are the highest they have been in 5 months at reaching 59.20 but this has failed to spark CAD buyers. Usually with such a decent spike in Crude we would see strong CAD strength but this just hasn’t eventuated showing how much the Canadian economy is under the pump. RBA minutes today and Thursday’s Aussie jobs data along with Saturday’s Canadian CPI could make for a volatile cross. Huge resistance is seen at 0.9500 - if price travels through here we could see 0.9570

DIRECT FX Current level Support Resistance Last wk range
AUD / CAD 0.9464 0.9420 0.9490 0.9386 - 0.9490

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Australia

With a lack of data published last week in Australia the Aussie Dollar followed offshore risk themes for most of the week based on Brexit and trade talk headlines. Perched around the 0.7050 area versus the US Dollar since early Friday sessions the currency looked to push higher Monday. If the Aussie can push above key 0.7120 resistance we see thin air through to 0.7200. With the shift to neutral from the RBA and slowing growth in China confirmed in recent data the Aussie has been unable to find any support higher across the board. A miss recently with Industrial Production and property slumping this week’s job's report remains key. Recent rhetoric by the RBA confirmed they were certain of future upbeat results to come out of job numbers and lower unemployment. Monetary meeting minutes from the RBA’s 5th of March review releases today, with the all crucial jobs data Thursday. Unemployment is expected to remain unchanged at 5%

New Zealand

The New Zealand Dollar under-performed against its main rivals in the later stages of last week’s trading nearly losing 2.0% against the Pound as Brexit carnage swung markets. A very quiet week for local data the kiwi was stuck in the 0.68's against the big Dollar. This week's economic docket sees Current Account Wednesday and quarterly GDP Thursday. Both could move the kiwi out of current ranges if the data surprises. Last quarter showed a large -6.15B deficit, the largest in many years, with Wednesdays number expecting to come in around -3.55B, the next largest since December quarter 2017. GDP is expected to print at 0.6% positive growth if this is releases lower as it did in the December quarter we could see the kiwi hit hard. Risk markets will be guided by headlines in the ongoing Brexit saga as well as US-China trade talks which are could be quiet this week with the next trade meeting pencilled in for late April.

United States

The US Dollar gave back gains Friday after a mixed bag of results. US Durable Goods surprised to the upside for January printing at 0.4% after -0.5% was expected by markets. This is the 3rd month in a row with figures showing business investment had the biggest increase and is still expanding. Although a stronger than expected University of Michigan consumer sentiment came in positive at 97.8 versus 95.5 this was offset by poor Industrial Production and Manufacturing figures. Thursday's Federal Reserve Cash rate holds most of the investor interest this week. With the Federal Reserve monetary policy only just above the normal range of growth we expect the Fed to maintain their 2.50% for March. Downside risks to the outlook have increased over the past months with treasury yields starting to price in chances of the fed cutting rates later in 2019 or 2020. Trade policy will have a lot to do with this with recent talks stalling with any real progress.

Europe

With most of the headlines focusing on Brexit outcomes over the past week the Euro has taken a back seat. Last week’s poor US data took the currency off the low of 1.1170 against the greenback reversing all its early losses as it travelled back to 1.1335. US Durable goods the only highlight after Producer Prices and CPI came in lower than experts expected. The recent status of Brexit has also stabilised the Euro somewhat after MP’s voted down a “no deal” scenario taking this off the table. The problem stemming now for UK lawmakers is that the EU won’t extend article 50 unless the fresh deal is significantly different to the previous two attempts. Eurozone trade balance reported a trade surplus of 17 Billion based on 17.2 Billion expected for January beating the December result of 15.6 Billion an excellent result all things considered.

United Kingdom

May met with Juncker early last week and tried to negotiate an orderly exit but fell short. On Tuesday Theresa May's Brexit deal was rejected for the second time after the parliamentary vote snubbed it 391 votes to 242. Another humiliating loss to PM May by a massive 149 votes. Another vote took place Wednesday in the British parliament where they voted on a "no-deal" Brexit exit option, taking this off the table. The result had MP's rejecting the UK leaving the EU without a deal by 321 to 278 votes. These results paint a pretty gloomy picture of just how the entire Brexit debacle has been managed. Theresa May has clearly done her very best but ultimately fallen short of expectations based on two factors, British sovereignty and no support from parliamentary opposition. Thursday parliament voted again to ask the EU for a delay to the 29th March departure, the vote coming in at 412 to 202 to delay a departure from the EU. Brexit now could be delayed by up to 3 months as long as MP’s back her withdrawal deal next week on the 20th. If May’s deal is rejected again she will request a further delay, this would likely be a delay of up to 2 years to come up with new proposals and ideas. Any changes or requests for extensions first must be agreed by the 27 members of the EU. If Brexit is starting to make your head turn to mush - not to worry you're not the only one. To summarise- the UK are still due to leave the EU on the 29th of March. There are two ways they can leave- with a deal or without. May still wants to pass her deal and will try for a third time this week. If it’s accepted the deal will go into law by the end of June. If not- the delay will be much longer. European Elections will be held in May, if the UK are still part of the EU then they will be required to take part in voting. We have a busy week on the UK calendar this week with the unemployment rate and Official cash rate to release.

Japan

Japanese Machinery Orders were down at -5.4% from -1.6% for the month of January citing the ongoing trade tariff war for the downturn as businesses decrease spending on investments in the wake of global uncertainty. Bank of Japan's Kuroda made waves at Friday's Monetary Policy meeting when he called Modern Monetary Theory an "extreme idea". The irony is that the Japanese government now owns half of all Japanese debt stemming from one of the gutsiest monetary policy programs in modern history, one in which he advocated. The problem for Kuroda is that he is a long way from achieving his goal 2% target and this has been unreachable since he came into power in 2013. He spoke of deteriorating exports and overseas risks that could threaten to harm the tender nature of the Japanese economy as he maintained the interest rate target at -0.1% in a 7-2 vote. Monetary policy minutes release Wednesday before a bank holiday Thursday in celebration of Vernal Equinox Day.

Canada

The Canadian Dollar has outperformed the greenback benefiting from increased buyer interest with the pair tracking lower to 1.3300 Friday. A stronger Crude Oil price to mid 58's per barrel also boosted the Loonie. The spike has been due to an inventory decline of 3.9M barrels for the week ending March 8th and a glut of 7.1M barrels the week earlier. Falling Venezuelan and Iranian production should keep the price high for a while but we suggest the high levels could be capped based on OPEC having a stockpile of reserves for such an occasion and will gauge the level of production to regulate price.  A little bit of Canadian economic data on the radar this week but not until Saturday morning. Monthly CPI and Retail Sales will be the focus with both expected to be lighter than previous readings.

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