Middle East conflict continues to drive market sentiment.
Focus remains on oil prices, energy supply, and inflation.
Markets have remained relatviely calm despite renewed fighting.
Further escalation could spark significant market volatility.
A ground war would increase the risk of a global energy crisis.
Higher energy prices would likely fuel inflation.
New Zealand and Australia remain particularly exposed due to energy dependence.
The Middle East war between Iran and the USA is escalating fast, with rumours that US may introduce ground forces. The ramping up of military action, follows massive missile and bomb attacks, from both sides. The instability resulting from the kinetic war is sapping market confidence and surging oil prices. Oil prices are testing US$85/barrel and may well top US$100/barrel. If this escalates and extends further, then we will probably see a return to a global energy crisis, sparking inflation fears. The other variable, that can impact the currency, is todays Q2 CPI number. It is expected to spike to 4%, explaining the RBNZ’s pre-emptive strike. This is not good for commodity currencies, especially energy dependent countries. The KIWI has drifted off recent highs and remains extremely vulnerable.
Current Level: 0.5847
Support: 0.5800
Resistance: 0.5875
Last week's range: 0.5748 - 0.5859
The recent RBNZ decision to increase rates at the last meeting was enough to trip the NZD/AUD out of their previous settled trading range. Q2 CPI is expected to spike to 4%, explaining the RBNZ pre-emptive rate rise. The NZD/AUD cross-rate was trading calmly around 0.8200, but has spiked since to above 0.8350. The rising threat from the Middle East, will impact energy dependent, including the AUD and NZD. The cross rate is liable to remain in the current trading range.
Current Level: 0.8354
Support: 0.8280
Resistance: 0.8370
Last week's range: 0.8288-0.8367
Current Level: (1.1986)
Support: (1.1940)
Resistance: (1.8370)
Last week's range: (1.1937-1.2040)
The recent jump in the NZD/GBP cross-rate has settle around 0.4350. There are factors that could impact this, with the transition to the new PM and his Cabinet. Market judgement, of the new regime, may well be delayed until policy and plans are revealed. Keep a close eye on UK Gilts, which will be the canary in the mineshaft. If the 10-year yields surge above 5%, then we may see currency fluctuations and downside.
Current Level: 0.4356
Support: 0.4330
Resistance: 0.4400
Last week's range: 0.4291-0.4348
Current Level: (2.2955)
Support: (2.2910)
Resistance: (2.3005)
Last week's range: (2.2993-2.3261)
The recent pop in the NZD/EUR cross-rate has settled at around 0.5100, but may be subject to some volatility, with the Middle East situation and the latest rendition of the ECB interest rate decision. The ECB is unlikely to raise rates again, but escalation of the war in the Middle East may trigger concerns over the impact on inflation, triggering a pre-emptive rise. This would bolster the EUR and add some downside pressure to the cross-rate.
Current Level: 0.5126
Support: 0.5070
Resistance: 0.5150
Last week's range: 0.5046-0.5097
Current Level: (1.9511)
Support: (1.9440)
Resistance:(1.9580)
Last week's range: (1.9565-1.9817)
The escalation in the Middle East situation is a major threat to the AUD. Australia remains energy dependent for supply, thus pricing. A resurgent energy crisis will hit the Australian economy hard and the currency will probably suffer accordingly. The AUD had regained 0.7000, but this week’s open, see a surrender the ‘Big Figure’. The AUD will remain vulnerable to the return of energy supply issues.
Current Level: 0.6998
Support: 0.6950
Resistance: 0.7030
Last week's range: 0.6916 - 0.7014
The arrival of a new British PM, in the form of Andy Burnham, may well add some spice to the AUD/GBP cross-rate this week. He will announce his Cabinet and we shall await market reaction. Markets will probably wait to offer judgment to assess his policies and plans. The UK Gilt market will be a great indicator of market perceptions. The cross-rate opens the week trading around 0.5200.
Current Level: 0.5213
Support: 0.5175
Resistance: 0.5240
Last week's range: 0.5168-0.5217
Current Level: (1.9186)
Support: (1.9120)
Resistance: (1.9235)
Last week's range: (1.9167-1.9341)
The ECB meet later in the week to decide weather to raise rates again, following a June tightening. The rapid escalation of the Middle East war and a looming energy crisis, may well tempt the ECB into a pre-emptive strike, on interest rates. If the Central bank decided to raise rates, it would boost the single currency in the short term, adding to downside in the cross-rate. The AUD/EUR opens the week trading around 0.6110.
Current Level: .6132 (1.6308)
Support: .6100 (1.6260)
Resistance: .6180 (1.6370)
Last week's range: .6069 - .6121 (1.6334 - 1.6473)
Current Level: 0.6132
Support: 0.6100
Resistance: 0.6180
Last week's range: 0.6069-0.6121
Current Level: (1.6308)
Support: (1.6260)
Resistance: (0.6370)
Last week's range: (1.6334-1.6473)
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