NZD and other risk associated currencies have tracked higher off the weekly open; AUD continues its merry way south against the NZD; no evidence to be found that President Trump coordinated with the Russian government

NZD and other risk associated currencies have tracked higher off the weekly open; AUD continues its merry way south against the NZD; no evidence to be found that President Trump coordinated with the Russian government

By Neven Fisher*:

Major Announcements last week:

  • UK Unemployment prints lower at 3.90% from 4.0%
  • US Fed retain the overnight rate at 2.50%
  • NZ quarterly GDP prints a solid 0.6%
  • Australian unemployment drops to 4.90% from 5.0%
  • UK Retail Sales releases up at 0.4% on expectations of -0.4%
  • Bank of England leave official bank rate at 0.75% voting 0-9
  • Eurozone manufacturing prints poor

NZD/USD

The New Zealand (NZD) and other risk associated currencies have tracked higher off the weekly open against the US Dollar (USD) to 0.6910 currently. After President Trump was cleared of his Russian collusion investigation sentiment improved. Time now we expect will be spent on further cementing a proper US/China trade deal, the timing couldn't be better for the president, he may hold a tougher stance in trade discussions as he now isn’t as desperate for a policy win. Tomorrow’s RBNZ cash rate announcement will hold local interest with the rate expected to remain unchanged at 1.75% for a while longer - Adrian Ore’s policy may be tweaked based on recent economic data, we expect a dovish stance. Price is inching towards the yearly high of 0.6940 and may get there if RBNZ allows.

DIRECT FX Current level Support Resistance Last wk range
NZD/USD 0.6916 0.6860 0.7000 0.6827 - 0.6938

NZD/AUD (AUD/NZD)

The Australian Dollar (AUD) continues its merry way south against the New Zealand Dollar (NZD) after breaking through 0.9700 (1.0309) again this week to a new high of 0.9732 (1.0275) as the kiwi momentum continues. Last week’s Aussie job numbers surprised, pushing buyers momentarily into the AUD but bouncing off 0.9700 (1.0310) the NZD regained its mojo. NZ Trade Balance surprised to the topside at 12M based on -200M for the month of march with milk powder, milk and cheese leading the way for strong exports after figures showed a poor release in February of -914M. RBNZ cash rate releases tomorrow and is widely expected to remain unchanged at 1.75%.

DIRECT FX Current level Support Resistance Last wk range
NZD / AUD 0.9711 0.9643 0.9737 0.9642 - 0.9731
AUD / NZD 1.0297 1.0270 1.0370 1.0276 - 1.0371

NZD/GBP (GBP/NZD)

Over the past five weeks it has been near impossible to determine price shifts in the New Zealand Dollar, British Pound (NZD/GBP) with Brexit occupying news headlines the Pound has appreciated and depreciated many times. Currently trading around the 0.5235 (1.9100) area the Pound has again been put under pressure as Theresa May struggles to gain enough parliamentary support for a third vote. Outside Brexit the RBNZ cash rate announcement Wednesday holds the most interest for investors as we try to determine Ors monetary policy direction. ANZ business confidence is Thursday before UK Current Account Friday. If May’s vote does actually happen this week, we may see a retest of 0.5290 (1.8900).

DIRECT FX Current level Support Resistance Last wk range
NZD / GBP 0.5239 0.5150 0.5263 0.5150 - 0.5274
GBP / NZD 1.9087 1.9000 1.9420 1.8960 - 1.9418

 NZD/CAD

The New Zealand Dollar (NZD) opened the week with a burst of energy reaching 0.9760 against the Canadian Dollar (CAD), carrying over its run up from last week. Data late last week in Canada turned in negative with Retail sales well down on expectations with crude oil coming off its recent highs. RBNZ tomorrow with CAD monthly GDP to print later in the week.

DIRECT FX Current level Support Resistance Last wk range
NZD / CAD 0.9259 0.9200 0.9300 0.9095 - 0.9281

NZD/EURO (EURO/NZD)

Discouraging eurozone manufacturing data has softened the Euro (EUR) and taken the New Zealand Dollar (NZD) to fresh yearly highs. Trading at 0.6110 (1.6370) the 5 December high price looks to retest 0.6130 (1.6320) the multi year high back to October 2017. German manufacturing produced a softer than forecast print which was the lowest since 2012. The RBNZ cash rate announcement is tomorrow together with governor Ore’s statement, we are expecting a dovish slant to policy over the rest of 2019. Draghi will also speak tomorrow night at a conference in Frankfurt- expect volatility and a possible look at 0.6130 (1.6320).

DIRECT FX Current level Support Resistance Last wk range
NZD/EUR 0.6109 0.6075 0.6130 0.6013 - 0.6116
EUR/NZD 1.6369 1.6320 1.6460 1.6350 - 1.6630

NZD/YEN

Risk currencies closed the week lower with the New Zealand Dollar (NZD) retreating to 75.50 against the Japanese Yen (JPY). Equity markets were sold off during the overnight sessions but have returned to close flat at the NY bell. This took the kiwi off its low to trade back around the 76.00 region. Tomorrow's RBNZ cash rate announcement holds the focus this week with analysts keen to hear if governor Ore will change his policy position. The yearly bullish run in this pair is still holding, we expect the price to edge back towards 77.00 as Brexit risks ease.

DIRECT FX Current level Support Resistance Last wk range
NZD / YEN 76.14 75.50 76.70 74.44 - 76.77

AUD/USD

The Australian Dollar (AUD) ended the week on a negative note against the US Dollar (USD) after retreating to 0.7080 as risk sentiment deteriorated. The RBA chief economist says the job’s market has undoubtedly improved - “employment has been strong and someone must be hiring all those extra workers” based on the better than expected unemployment print from last Thursday. The RBA still seem transfixed on the job’s market to guide policy. With the Aussie back trading above 0.7100 this morning we look ahead to Wednesday’s US Building permits for direction. Friday’s US fourth quarter GDP will also give us more to go off. Look for drops to be well supported ahead of 0.7000

DIRECT FX Current level Support Resistance Last wk range
AUD / USD 0.7116 0.7060 0.7160 0.7057 - 0.7163

AUD/GBP (GBP/AUD) 

The Australian Dollar (AUD), British Pound (GBP) pair remains choppy as Brexit builds steam towards a solution. The cross currently trading at 0.5390 (1.8560) was at a four week high Friday of 0.5453 (1.8337) but wasn’t able to continue any momentum after headline news shifted the Pound back in favour to close 0.5360 (1.8660) for the week. Theresa May is struggling to gain enough parliamentary support for a third vote this week which could put pressure firmly back on the GBP.  UK Current Account prints Friday. Watch for continuing Brexit headlines for further direction.

DIRECT FX Current level Support Resistance Last wk range
AUD / GBP 0.5391 0.5330 0.5435 0.5324 - 0.5453
GBP / AUD 1.8549 1.8400 1.8770 1.8340 - 1.8783

AUD/EURO (EURO/AUD)

Australian jobs numbers took the Australian Dollar (AUD) higher mid last week against the Euro (EUR) to 0.6295 (1.5885) before the Euro regained some losses with the cross closing the week at 0.6265 (1.5960). Eurozone manufacturing was a let down with France and German figures producing softer than forecast readings- the lowest since 2012 and the pressure squarely back onto the Euro. Price retraced Friday’s moves back towards the high of 0.6295 (1.5885) currently trading at 0.6285 (1.5906) at the time of writing. Both central banks speak this week otherwise a light calendar.

DIRECT FX Current level Support Resistance Last wk range
AUD/EUR 0.6289 0.6225 0.6320 0.6220 - 0.6294
EUR/AUD 1.5900 1.5820 1.6070 1.5888 - 1.6076

AUD/YEN

The Australian Dollar AUD) retreated off last week’s high of 79.55 versus the Japanese Yen (JPY) to post a low Monday of 77.53 as risk products such as the Aussie came under pressure. Australian jobs report showed a small number of jobs (4,600) were added to the workforce a little light on expectations but it was the unemployment rate markets focused on coming in at 4.9% from 5.0% which put pressure on the Aussie. This week is a quiet week on the economic docket for the pair with only RBA governor Ellis and Kent speaking. This morning the AUD has recovered losses recovering back over the 78.00 area.

DIRECT FX Current level Support Resistance Last wk range
AUD/YEN 78.38 77.60 79.40 79.35 - 77.54

AUD/CAD

The Australian Dollar (AUD) continued is push higher on Monday’s open to 0.9455 against the Canadian Dollar (CAD) a seven week high. Crude oil has tracked lower off its recent highs and Friday’s Retail sales put the CAD well on the backfoot with the release disappointing. This week’s focus will be firmly on Canadian m/m GDP for April with March showing a poor -0.1%.

DIRECT FX Current level Support Resistance Last wk range
AUD / CAD 0.9528 0.9480 0.9600 0.9413 - 0.9547

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Australia

The Australian Dollar (AUD) spiked to a three week high of 0.7167 against the US Dollar (USD) Thursday after Australian jobs data pushed new interest into the Aussie. A small number of jobs (4,600) were added to the workforce, a little light on expectations, but it was the unemployment rate markets focused on coming in at 4.9% from 5.0% which rallied the AUD across the main board of currencies. Friday saw a shift in sentiment with markets focusing on the long term ramifications of a dovish fed together with a lack of any real progress in the US-China trade deal. Equity markets fell sharply and risk took a beating with the Aussie opening Monday at 0.7075 against the US Dollar. A quiet week on the calendar should see the AUD float on offshore headlines.

New Zealand

The New Zealand Dollar outperformed its rivals late last week after quarterly GDP published at the expected 0.6%. Markets were overly pessimistic of a lower reading so when the release published positive the NZD pushed topside. Focus this week will be squarely on the RBNZ Cash rate announcement Wednesday and subsequent statement by Adrian Ore. Markets are currently pricing in no chance of a move in the 1.75% current cash rate, but comments around an increasingly dovish monetary policy stance by Ore will be key. If we compare February expectation of an 18% chance of a rate cut by June to 10% rate increase now through to the end of June this shows a shift to policy outlook with the RBNZ becoming more neutral in the last few weeks based on weakening economic data. ANZ Business confidence prints Thursday before governor Ore speaks again Friday.

United States

The investigation into the conduct of President Trump by Robert Mueller concluded over the weekend with no evidence to be found that President Trump coordinated with the Russian government during the 2016 Presidential campaign. With President Trump exonerated attention will now divert back to the US-China trade discussions. Mueller who has spent 2 years turning over every rock in efforts to expose efforts by Russia to sabotage the 2016 elections has turned up no conspiracy. Mueller in his summary concluded that President Trump had committed no crime. The next round of trade discussion will take place this week along with conference board consumer confidence and revised quarterly GDP.

Europe

The Euro weakened off late last week against most of the major currencies based on US Dollar strength and weaker than predicted manufacturing numbers. German manufacturing reported a fall with the index showing 44.7 down from 48.0 this is the 14th drop in the last 15 readings proving another grim reading highlighting contracting growth and worrying signs of continued poor manufacturing data/ recession. The Eurozone Flash manufacturing index fell to a two month low of 47.6 in March from 47.6 in February with analysts forecasting the number to print at 49.5 - this is the biggest downturn over the past 6 years with gloomier future predictions forecast. A light eurozone economic docket this week with just the ECB president Draghi speaking in Frankfurt.

United Kingdom

Above is most of last week’s Brexit events...

Japan

The Japanese Yen was the best performing major currency last week appreciating over 2% against the Canadian Dollar and nearly 1% against the kiwi. As a risk off theme developed late during Friday’s NY and European sessions markets became risk averse the Japanese Yen the benefactor with investors seeking the Yen. The former Bank of Japan governor Nakaso has said the BoJ global policies will remain “looser” for longer. I suspect he means forever. Japan y/y inflation printed slightly down on expectations at 0.7% from 0.8% remaining a long way from the central banks 2.0% target of inflation. This shows the precarious position of Japan’s economy with escalating US-China trade and Chinese growth weighing on business sentiment. Japan Unemployment prints this week and should remain at a positive 2.5%.

Canada

Canadian data printing Friday was mixed at best with the Canadian Dollar underperforming across the board. Monthly CPI came in at 0.7% which gave the Loonie a short boost based on predictions of 0.6%. Y/y CPI rose to 1.5% up from 1.4%, January taking the hit with falling crude oil prices but February looks decisively and surprisingly upbeat even though the reading is negative. Retail Sales wasn’t so lucky down at -0.3% from 0.4% expected missing its target for the 3rd consecutive month with sales down in 4 of the 11 subsectors. Crude oil had a rollercoaster week up initially to a new high over 60.00 per barrel but declined over the late stages of the week to 58.50 based on supply and demand fundamentals - i.e. the ongoing trade war. This week we see Trade balance and monthly GDP on the calendar.

Daily exchange rates

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USD 
NZD
End of day UTC
Source: CoinDesk

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