NZD closed the week higher against the USD and should appreciate if a risk-on move occurs; NZDAUD market continues to be choppy with a move down to 0.9170 possible; AUD on the back foot against the USD

NZD/USD

The New Zealand dollar (NZD) closed the week higher against the United States dollar (USD), well up on the midweek low of 0.7180 and pushing as high as 0.7270 post Monday’s open. Looking fairly robust as always it should continue to appreciate back to early Feb highs of 0.7400 as risk on becomes the flavor. Friday’s NZ Retail figures will be key to this. The other release to keep an eye on this week will be US inflation which hits the wires on Wednesday night. A strong US inflation result will push US interest rates higher again, which could easily spark another wobble in the equity markets and result in another wave of “risk off” sentiment in currencies.

NZD/AUD (AUD/NZD)

The New Zealand Dollar (NZD) continues to remain bid against the Australian dollar (AUD) in a choppy market. The NZD has continued to have the edge and is currently finding support above the 0.9200 (1.0870) level. I’m expecting a slide in the NZD/AUD over the next couple of day to 0.9170 (1.0905) levels based on a head and shoulders pattern setup, back to the Feb low. Customers looking to transfer NZD to AUD should take advantage of the current level, or any near-term strength, to transact.

NZD/GBP (GBP/NZD)

The Great British Pound (GBP) came off hard against the New Zealand dollar (NZD) on Friday heading into the weekly close. Travelling from a relatively steady 0.5170 (1.9342) the pound was offered to 0.5265 (1.9000). The pair remains in a tight range post Monday’s open around 0.5243 (1.9070), the February high of 0.5274 (1.8960) looks venerable if support continues for the kiwi (NZD).

 NZD/CAD

The New Zealand dollar posted gains against the Canadian Dollar last week closing a cent higher driven by disappointing Canadian jobs data. The Canadian dollar has started this week on the back foot as the kiwi eyes the previous near term high of 0.9190.

NZD/EURO (EURO/NZD)

The NZD/EUR volatility continued over the week with little overall direction. The New Zealand dollar (NZD) closed the week against the Euro (EUR) at 0.5927, and currently trades around 0.5905. The long term bearish trend is still in place from the high of 0.6856 (1.4585) on 5th February 2017. Near term strength is currently limited to resistance around 0.5970 (1.6940), while support comes in on the downside around 0.5720.

NZD/YEN

The New Zealand Dollar/ Japanese Yen cross lost ground Friday as it headed into the weekly close 200 points weaker than Mondays open. Trading as low as 78.30 on Friday it recovered slightly just shy of 79.00 figure. Following long-term movements, we note it trades bang on the 50% retracement in the range between 75.60 low and 83.70 high with expectations it may continue to push back to 81.00 over the next while.

AUD/USD

The Australian dollar (AUD) continued to stay on the back foot last week trading to a low Friday of 0.7760 against the United States dollar (USD). The Australian dollar has bounced off the 50% retracement level 0.7510 low - 0.8116 high this week looking in a hurry to get back to 0.8000, Thursday’s AUD unemployment figures should show further direction.

AUD/GBP (GBP/AUD) 

The Australian dollar (AUD) profited from the risk on market late Friday and it remained bid heading into the close at 0.5653 (1.7695) vs the UK Pound (GBP). It has started the week continuing the positive mood trading through resistance of 0.5680 (1.7600). We look for further upside price action in the coming days.

AUD/EURO (EURO/AUD)

The Australian dollar (AUD) broke last week’s tight trading range on Monday pushing past resistance of 0.6390 (1.5650) against the Euro (EUR). Trading Tuesday above 0.6400 it looks to bounce back at 2017 levels of 0.6535 (1.5300).

AUD/YEN

The Australian Dollar / Japanese cross (AUD/JPY) traded down to a post 23 November low of 84.50 before rebounding back early Tuesday to 85.40. The Australian Dollar looks to make further gains against the EUR this week setting its sights on near term resistance level of 86.00

AUD/CAD

The Canadian dollar (CAD) made gains against the Australian dollar (AUD) but the Canadian Dollar recovered well to end the week square at 0.9820. Tuesday’s support for AUD has been evident as it stages a comeback towards late January parity levels.

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Market commentary:

Equity markets in the US turned back into positive territory Friday, the Dow up 1.4% although there is a way to go to match the late January high of 26,616. The Nasdaq is also trading above 1% for the day. The big mover was Crude, down 3.3% to trade back below 60.00 plunging more than $5.00 amid a surging US Oil production, suggesting the oversupply could be a theme over 2018. The US government has ended the short shutdown with the agreement of raising the federal budget cap by nearly $300 billion, signing a two-year spending deal.

Meanwhile medical marijuana continues to grow in support across the US, Virginia last week allowed state residents to take cannabis oil for treatment of severe epilepsy, cannabis stocks are on the high with more widespread acceptance.

The Canadian leader Trudeau spoke on Friday on NAFTA as he tries to win support from US lawmakers to keep trump from boycotting the north American free trade agreement as he has threatened to do several times, this comes where US trade representative Robert Lighhizer grows more frustrated with the government.

The last session of the week was reasonably calm after a huge amount of volatility. The US Dollar and the Japanese Yen gained ground while the Pound, EUR, Aussie Dollar and New Zealand Dollar all depreciated following the stock market crash on Monday and again on Thursday. Expect risk currencies to lose further support this week if interest diverts back into Bonds from Equities. This week sees a fairly busy economic calendar, we may see another week of extended movement in prices across the board.

Australia

The Australian dollar remained mainly offered through the Friday sessions. Equities were back in favor offering the Aussie support coming off its low of 0.7765 to close at 0.7804 in NY. China Trade surplus for January declined to 20B from 54B YoY exceeding expectations also contributed to boost risk.  NAB Business confidence for the 4th quarter declined a little and had little effect on volatility. Tuesday should offer support for AUD to rebuild back toward post meltdown late January levels of 0.8100 if the Business confidence numbers prints well.

New Zealand

The New Zealand Dollar continued its run lower against the majors late last week closing lower but regaining ground late during NY session Friday. The NZD showed resilience over its trading partners outperforming overall. Assistant governor McDermott spoke post rate announcement indicating a slightly dovish tone indicating a drop in inflation figures could raise the possibility of an interest rate cut. At home Wednesdays quarterly inflation expectations will be important to the NZD’s support, Thursday CPI inflation figures in line with Spencer’s comments last Thursday, and retails sales data will be crucial for NZD to sustain levels above 0.7200 against the US Dollar and buoyant overall in the short to medium term.

United States

Friday saw another shutdown of the US Government, and although only brief, it pushed lawmakers to make a decision on budget caps. The agreement confirmed raising the federal budget cap by nearly $300 billion, signing a two-year spending deal. With a relatively quiet end to the week compared to the turmoil in equity markets earlier the Greenback took a well-earned breather. Moody credit rating agency warned that the US stable credit profile is in jeopardy due to fiscal deterioration and widening of the US budget, they added that the strength in the US Dollar plays a pivotal role in global capital markets and does not coincide with the weakening fiscal stance. The US Dollar index is trading just above 90.30 Monday and looks poised to make gains in the coming week if the slew of economic data including core CPI, Retail Sales and Building Permits this Thursday exceeds expectation.

Europe

EUR continued to be sold off from its high of 1.2512 last week declining to 1.2250 at the close of NY business. Dollar gains led to a sharp reversal in EUR fortunes triggered by strong wage growth. The move continued on risk aversion, as worldwide equities dropped like a bird highlighting in gains in the US Dollar. The only data to come out of Europe saw German Trade Surplus print 18.2Bln as opposed to 21Bln prior. The EUR has opened positively trading up through key resistance if 1.22580 Monday. This week we have German Prelim quarterly GDP and Flash quarterly GDP. EUR needs this these figures notably good for the current bullish trend to continue back through 1.2500

United Kingdom

The Great British Pound fall away sharply late last week after the Bank of England left rates on hold. Indications were of a hawkish tone after suggesting they may need to raise rates earlier than expected citing inflationary pressures around CPI pushing above 3%. The Pound traded higher after the announcement to 1.4070 but was soon under pressure dropping to a fresh weekly low of 1.3760 in a risk off market before support resumed at 1.3800. Tuesday’s yearly CPI data will be clearly key and will certainly confirm prospects for a May rate hike which is now priced in at a 80% probability. This week GBP will remain sensitive with a lot of the line when we look at long-term direction.

Japan

The Japanese yen has been modestly quiet of late, closing the week at 108.80 down slightly off the open last week of 110.10 as movements were limited to offshore news. As equity markets made large moves this failed to trigger a notable move in the JPY as it held firm to 108.50 The Japanese government is set to reappoint Kuroda as BoJ Governor as 86% expected his re-appointment. This week will be interesting to see if the risk off market continues to influence the JPY as uncertainty with volatility continues. Quarterly Prelim GDP data is set to be released on Wednesday, followed by Core Machinery Orders and Revised Industrial Production on Thursday.

Canada

In volatile markets, the Canadian Dollar lost ground against the US Dollar over the past week trading as high as 1.2650. Unemployment figures printed Friday were well up on the expected forecast numbers of -10.1k to 88.0k. The Unemployment rate also slightly high than expected at 5.9% pressuring the CAD. Canadian housing starts came in slightly better than the expected 216k against 210k for January but the CAD remained under pressure trading into the 1.26 region for the first time in 2018.

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