• The strait of Hormuz is still closed. Iran warned “Get ready for $200 a barrel”. The international Energy Agency said 400M barrels of oil could be released from emergency reserves efforts to stabilise supply and price.
• The US Dollar firms on US Inflation data, equities close mixed.
• We expect the RBA to hike interest rates on March 17th and again in May as inflation risks rise.
• A heavy “risk off” tone has gripped markets over the past 24 hours as global risks intensifies.
• US CPI remains at 2.4% y/y with rate cuts in doubt if energy prices continue to rise.
• The Euro (EUR) was the strongest currency this week while the weakest performing currency has been the Australian Dollar (AUD)
The New Zealand Dollar (NZD) dropped lower Wednesday against the US Dollar (USD) reaching the key level of 0.5850 this morning. This level marks a pivotal support suggesting the kiwi could be on the verge of a bigger fall. Global markets have turned more risk-averse in the New York session with escalating Middle East tensions continuing to disrupt supply weighing on equities and energy related currencies, all the while boosting the safe-haven greenback. US CPI held steady at 2.4% y/y in February however, its likely a sharp spike is immanent giving the Feb have no reason to cut at their March 19 review. Topside moves by the kiwi short to medium term may be tough work while global uncertainty exists.
The current interbank midrate is: NZDUSD 0.5849
The interbank range this week has been: NZDUSD 0.5846- 0.5964
Miraculously the New Zealand Dollar (NZD) has stabilised around 0.8280 (1.2080) levels Friday against the Australian Dollar (AUD) as risk markets took a back seat to safe-haven products. Earlier in the week we saw prices move off 0.8425 (1.1870) as expectations markets are predicting the RBA to hike interest rates at next week's policy meeting to 4.10%. A breakthrough 0.8265 (1.2100) in March will confirm the lowest monthly level in the cross since May 2013. NZ quarterly GDP for the 4th quarter of 2025 prints next Thursday and should show numbers around 0.5%- down from third quarters 1.1%. Heading towards next Tuesday's RBA meeting it's hard to see significant reversals eventuating.
The current interbank midrate is: NZDAUD 0.8265 AUDNZD 1.2092
The interbank range this week has been: NZDAUD 0.8258- 0.8425 AUDNZD 1.1869- 1.2109
The British Pound (GBP) has pushed higher outside of its 3-week range against the New Zealand Dollar to trade to 0.4385 (2.2800) Friday. A market "risk off" tone has developed stemming from the ongoing war between the US/Israel and Iran. The shock rise in Crude Oil prices has helped boost the Pound together with a dovish stance by the RBNZ. Also, of note the Bank of England (BoE) may delay rate cut projections if inflation risks persist. A breakthrough key support at 0.4365 (2.2900) looks safe for now.
The current interbank midrate is: NZDGBP 0.4381 GBPNZD 2.2825
The interbank range this week has been: NZDGBP 0.4383- 0.4432 GBPNZD 2.2563- 2.2815
The New Zealand Dollar (NZD) has reversed lower off the recent range high retreating to 0.5080 (1.9680) into Friday as markets turn "risk averse". The backdrop turned supportive for the Euro (EUR) as the Iran war revives inflation concerns right at the time the ECB thought economic conditions were starting to stabilise. The recent war in Iran has prompted the ECB to consider rate hikes by mid this year. We see further drops in the kiwi supported around the 0.5050 (1.9800) area.
The current interbank midrate is: NZDEUR 0.5078 EURNZD 1.9692
The interbank range this week has been: NZDEUR 0.5074- 0.5125 EURNZD 1.9512- 1.9706
The Australian Dollar (AUD) reached 0.7180 against the US Dollar (USD) early yesterday a June 2022 high but wasn't able to hold this level as the Aussie gave back gains to risk sentiment retreating to 0.7080 at the NY close. Prices above 0.7000 look to be well supported "big picture" with setbacks restricted to this zone through to next Tuesday's RBA interest rate announcement and policy meeting. The RBA is likely to raise rates next week to 4.10% with an eye on rhetoric suggesting the RBA will hike again later in the year. With inflation about to go much higher based on energy costs in the Middle East and a tight jobs market the central bank doesn't have much of an option.
The current interbank midrate is: AUDUSD 0.7075
The interbank range this week has been: AUDUSD 0.6956- 0.7185
Australian Dollar (AUD) momentum has continued into the later half of this week's trading week with prices reaching 0.5350 (1.8700) yesterday as the repricing of RBA interest rate rises takes hold. This level is a December 2023 high, a push past 0.5375 (1.8600) and we are back at mid-2023 levels. Weak growth outlook in the UK has been downgraded 1.0% weakening UK economic confidence. Looking forward the RBA should hike at next week's RBA meeting 0.25% boosting the AUD, but with geopolitical uncertainties to deal with this may dampen AUD upside.
The current interbank midrate is: AUDGBP 0.5301 GBPAUD 1.8864
The interbank range this week has been: AUDGBP 0.5231- 0.5349 GBPAUD 1.8692- 1.9114
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