FOREX: Kiwi Pressured by Overnight Comments, AUDNZD Approaches Cycle Highs
Oct-31 10:02
- Intraday weakness for NZD stands out on Friday, in a more subdued session overall for G10 FX. The Kiwi was pressured by comments from RBNZ committee member Prassanna Gai, who said that global shocks appear to have offset some of the monetary easing that has taken place since August 2024.
- Gai stated that “For a small open economy like New Zealand, the US tariffs have acted as a negative demand shock. Compounding this has been a much broader uncertainty shock as the weaponization of trade and finance have profoundly changed widely accepted norms and international rules of the game.”
- Combined with the renewed strength for the dollar following the Fed, the comments have allowed NZDUSD to extend lower, maintaining the bearish tone for the pair in recent months.
- NZDUSD trades within 40 pips of cycle lows, located at 0.5683. A move below here would turn the focus to 0.5636, the 76.4% retracement of the year’s range. 2025 lows are located at 0.5486.
- It’s also worth noting that AUDNZD (weekly chart below), a cross that has garnered much attention, traded within 4 pips of cycle highs earlier today. It appears that solid demand was found beneath 1.13 and the rally could be set to extend towards the 2022 highs at 1.1491. A break of this level would place the cross at its highest point since 2013. Both the RBA and NZ employment are scheduled next week.
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EU: Firms Present Copenhagen Pledge To Ldrs; Investment In Exchange For Reforms
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With member state leaders holding an informal meeting in the Danish capital today, twenty-eight large European firms have presented them with the 'Copenhagen Pledge'. This says firms "stand ready to increase investment levels in Europe by ~50% towards 2030" should the EU and its member states engage in a series of major reforms. Claims that with reforms and private investment, "Europe could be on track to close most of the ~800EURbn annual investment gap outlined by Draghi."
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- 'Power the future of Europe: Clean, competitive, and resilient energy for industrial leadership' - i.e. expand grids, faster permitting for infra, increase clean energy production while ensuring renewable competitiveness
- 'Build a competitive and resilient defence industrial base' - i.e. large-scale orders to encourage sector, remove barriers to transnational cooperation, use EU financial instruments to leverage private capital.
- 'Advance Europe’s technological resilience' - i.e. ensure EU as a market leader in AI, quantum, green and clean tech, ensure critical infra like 5G and 6G to enable next-gen services.
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