• Volatile markets have seen risk on markets turn back to risk off based on persistent US inflation and geopolitical uncertainty.
• The US military has been running a thin shipping corridor through the Strait of Hormuz over the past few weeks moving over 10M barrels of oil a day.
• Australian unemployment ticked up to 4.5% in July from 4.4% in June.
• Much to the dismay of President Trump, Fed’s Musalem says hiking interest rates now could save more aggressive action later.• US Retail Sales falls -0.6% in July vs 0.1% forecast as consumer spending deteriorates.
• CPI in the US y/y declined last month based on falls in oil and gas prices. Consumer prices increased 3.4% from last years 3.5%, this should leave the Fed less confident to hike rates.
• The RBA held their interest rate at 4.35% for the second straight meeting with the board saying they would need to hike again if inflation risks worsen. July 26th Inflation will be the key release, for now most expect the central Bank to hold into 2027.
• The strongest main board currency this week has been the Japanese Yen (JPY) while the worst performing currency is the Japanese Yen (JPY) second week running.
Thursday saw a close in the New Zealand Dollar (NZD), US Dollar (USD) cross above the key 0.5900 area as broad-based weakness in the USD improved the kiwi. As we predicted prices posted a fresh high of 0.5964 before retreating towards 0.5940 levels this morning. NZ Inflation expectations for the next 2 year shrank from 2.53% to 2.34% which is good news for a struggling NZ economy. Analysts report NZ is through the worst of inflation and the unemployment squeeze. If the bull run continues, we could retest 0.6000 in the coming days.
The current interbank midrate is: NZDUSD 0.5947
The interbank range this week has been: NZDUSD 0.5859- 0.5964
The New Zealand Dollar (NZD), Australian Dollar (AUD) travelled to both ends of the 7-week range over the week testing 0.8265 (1.2100) levels and back to 0.8370 (1.1946) improving midweek on a poor Aussie jobs report. Recent gains made by the AUD were sharply capped by labour concerns and reduced likelihood of the RBA tightening policy (raising interest rates). Unemployment climbed to 4.5% in July while employment fell by 16,000 followed by June’s 80,000 increase. A push past March’s 0.8370 (1.1950) could spell a long term bullish structural shift.
The current interbank midrate is: NZDAUD 0.8355AUDNZD 1.1959
The interbank range this week has been: NZDAUD 0.8271- 0.8371AUDNZD 1.1946- 1.2090
It’s been a game of two halves this week for the New Zealand Dollar (NZD), British Pound (GBP) cross, the kiwi bottoming out at 0.4330 (2.3090) before returning to 0.4375 (2.2850). Headline UK inflation came in at 2.9% as predicted in July well above June’s 2.6% y/y reinforcing market expectations of a hike before the end of the year. Earlier the kiwi was hit hard as the 2-year inflation expectation creeped lower off 2.54% to 2.34% reducing pressures for the RBNZ to hike. On the chart we are picking a retest of the zone around 0.4345 (2.3030).
The current interbank midrate is:NZDGBP 0.4360GBPNZD 2.2935
The interbank range this week has been:NZDGBP 0.4330- 0.4376GBPNZD 2.2848- 2.3092
The bull channel we have been monitoring over the past 8 weeks in the Australian Dollar (AUD), US Dollar (USD) cross remains intact with prices clocking a new high of 0.7130 in overnight NY. This followed a move lower to 0.7065 earlier in the week post Australian jobs data publishing. Unemployment rose to 4.5% in July with a sharp decline in employment down 16,000. Analysts are now predicting a modest chance the RBA will hike interest rates for the remainder of 2026. The Aussie recovering on a soft USD after cooling inflation pressures. Next week’s Aussie CPI and the Jackson Hole Symposium should be interesting.
The current interbank midrate is:AUDUSD 0.7114
The interbank range this week has been:AUDUSD 0.7066- 0.7132
After starting the week on a positive foot, the Australian Dollar (AUD) pulled back off 4-week highs at 0.5260 (1.9015) to post 0.5210 (1.9190) in early Friday trade. The UK jobs report showed further cooling reinforcing chances the Bank of England may pull back on raising interest rates. However, perhaps not with headline inflation rising from 2.6% to 2.9% in July above the BoE forecast. This has added fuel to the fire of a hike before the end of the year. Aussie job numbers worsened with unemployment rising from 4.4% to 4.5% above expectation with chances now reduced for a rate hike before year end. Next week’s Australian inflation read could set the tone.
The current interbank midrate is:AUDGBP 0.5220GBPAUD 1.9157
The interbank range this week has been:AUDGBP 0.5211- 0.5259GBPAUD 1.9013- 1.9189
The Direct FX app has been updated to include currency charts and the highs/lows for the past 24 hours. Along with our regular market commentary, the Direct FX app also has live indicative market mid rates and a currency conversion calculator. Use the relevant link below to take you directly to the version for you, or simply search for it in the App store / Play store.
