• Shipping through the Strait of Hormuz remains restrictive to traffic.
• The Bank of Japan (BoJ) left their cash rate at 0.75% Tuesday in a 6-3 vote.
• European Central Bank (ECB) left its interest rate unchanged overnight at 2.15% siting ongoing inflation. ECB President gave away no clues as to if the central bank may hike in the June meeting.
• The Bank of England (BoE) left interest rates unchanged at 3.75% as widely expected as the Iran war causes ongoing problems for policymakers.
• The Bank of Canada (BoC) left rates unchanged at 2.25% saying growth was soft but not bad yet enough to force cuts.
• The New Zealand Dollar (NZD) has been the strongest performer this week while the US Dollar (USD) has been the worst performer.
The New Zealand Dollar (NZD) reversed off 0.5815 post the Fed rate announcement to trade back around 0.5900 levels against the US Dollar (USD) Friday as risk improved. The cross started the week on a defence footing after the Fed tone drove markets risk off, the central bank leaving rates unchanged at 3.75% saying the war in Iran will continue to push up energy prices and inflation expectations. We may see a retest of the daily high at 0.5920 before the weekly close confirming a 2-month high.
The current interbank midrate is:NZDUSD 0.5903
The interbank range this week has been:NZDUSD 0.5813- 0.5923
Lower lows followed by lower highs is the theme this week in the New Zealand Dollar (NZD), Australian Dollar (AUD) cross with price making new lows midweek at 0.8175 (1.2233) before settling around 0.8210 (1.2180) as risk sentiment boosts the Aussie. Policy divergence is still a huge factor in the cross leaving the kiwi venerable to downside shifts. Next week’s RBA rate announcement and policy statement holds key importance with a possible hike on the cards from 4.1% to 4.35%.
The current interbank midrate is: NZDAUD 0.8196AUDNZD 1.2188
The interbank range this week has been: NZDAUD 0.8174- 0.8233AUDNZD 1.2145- 1.2233
The Bank of England (BoE) Continues to navigate through inflation fog as do other central banks in a world of geopolitical uncertainty and volatility. The Bank of England (BoE) leaving their cash rate unchanged last night at 3.75% in a 1-8 vote by the voting members. Post release the NZD picked up bids from 0.4320 (2.3140) levels to reach 0.4350 (2.3000) early this morning. Next week’s data comes in the form of NZ unemployment figures. We expect the kiwi to retest the zone around 0.4320 (2.3140) prior to the weekly close.
The current interbank midrate is:NZDGBP 0.4338GBPNZD 2.3052
The interbank range this week has been:NZDGBP 0.4320- 0.4371GBPNZD 2.2878- 2.3144
Risk on returned to markets midday yesterday pushing up the Australian Dollar (AUD) from 0.7110 against the US Dollar (USD) to 0.7200 levels breaking past stiff resistance at 0.7180. A weekly close above 0.7210 could signal further upside with thin air on the chart through to 0.7500 levels. Earlier the Federal Reserve kept their cash rate on hold at 3.75% the third consecutive time with Chairman Powell saying the economy has been expanding at a solid pace. The Feb will closely monitor the effects of the Iran war and its fallout to energy prices and inflation. All eyes will be on next week’s RBA rate announcement with a 40% chance the central bank may hike interest rates off 4.1% to 4.35%.
The current interbank midrate is: AUDUSD 0.7199
The interbank range this week has been: AUDUSD 0.7100- 0.7204
The Bank of England (BoE) voted against a cash rate hike 8-1 in yesterday’s late UK session keeping interest rates at 3.75%. Governor Bailey saying, “there are really bad scenarios in the Iran conflict.” The Iran war is expected to push up energy prices with the ongoing job to mitigate these pressures tough going with relation to ”fine tuning” monetary policy. RBA cash rate is Tuesday with expectations of a hold at 4.10% with a hawkish slant.
The current interbank midrate is: AUDGBP 0.5291GBPAUD 1.8900
The interbank range this week has been: AUDGBP 0.5275- 0.5320GBPAUD 1.8795- 1.8954
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