The bond crisis engulfing markets last week, had seen global bond yields spike and the US Dollar tumble. This crisis was averted by Treasury Secretary Bessant, who announced a buy-back package, with the backing of an insurmountable US$1Trillion ‘General Fund’. This calmed markets, without question, but all the underlying causes of the crisis remain. The energy crisis and the flow on to global inflation, has sparked a perfect storm, combined with fiscal ignorance/negligence. Attention now turns to Jackson Hole, where solutions are being sought. Will Central Bankers, led by the Federal Reserve, come up with a plan? Will Treasury force the Fed into action? These questions may be answered later today.
The NZD has been steady, so far this week, trading around 0.5950 Friday. Attention that was focused on the looming bond market crisis, has been diverted towards inflation and the Central Bankers meeting in Jackson Hole. Treasury Secretary Bessant had calmed bond markets by backing his bail-out package with US$1 Trillion from Treasuries ‘General Fund’. Attention now turned to the Federal Reserve, where Chairman Warsh will address the Jackson Hole Symposium, later today.
The current interbank midrate is: NZDUSD 0.5951
The interbank range this week has been: NZDUSD 0.5931- 0.5981
The latest Australian CPI number confirmed hotter than expected inflation. The annualised rate came in at 3.5%, down from 3.8%, but way above the expected fall to 3.2%. Inflation has been in sharp decline in Australia recently, but this hotter than expected number, only adds pressure to the RBA to raise rates. This supported the AUD and the cross rate with the NZD, moved sharply lower. The rate plunged towards 0.8250, leaping out of recent trading ranges and looking to head lower.
The current interbank midrate is: NZDAUD 0.8270 AUDNZD 1.2081
The interbank range this week has been: NZDAUD 0.8267- 0.8348 AUDNZD 1.1978- 1.2096
Steady bond and currency markets have allowed the NZD/GBP to operate in a continued tight trading range. The cross-rate has traded between 0.4330 and 0.4390, which has been the story for the last week or so. This is likely to continue unless there is some dramatic ‘black swan’ event.
The current interbank midrate is: NZDGBP 0.4377 GBPNZD 2.2846
The interbank range this week has been: NZDGBP 0.4361- 0.4383 GBPNZD 2.2815- 2.2926
US Treasury plans to calm the bond markets appear to have worked and this has also stabilised currency markets. Trading ranges have tightened and this was also true for the NZD/EUR, which traded between 0.5060 and 5130. This tight range is likely to continue.
The current interbank midrate is: NZDEUR 0.5106 EURNZD 1.9584
The interbank range this week has been: NZDEUR 0.5094- 0.5122 EURNZD 1.9521- 1.9629
A hotter than expected Australian CPI number, blasted the AUD out of the steady trading range, it had been enjoying for the last couple of weeks. Australian inflation has been tumbling for the last few months, but this steady and precipitous fall, may have been halted. Headline CPI fell from 3.8%, to 3.5%, but expectations were for a fall to closer to 3.2%. This will add pressure to the RBA to raise rates, interrupting, what has been a steady softening of monetary policy. The AUD reversed course and jumped back to 0.7200, outperforming major currencies and looking bid.
The current interbank midrate is: AUDUSD 0.7194
The interbank range this week has been: AUDUSD 0.7137- 0.7197
The global bond crisis, looks to have been diverted, at least for now. The $1Trillion support from Treasury’s ‘General Fund’, is too big to question and flushed out panic sellers. Attention now turns to the Federal Reserve and global Central Bankers, meeting in Jackson Hole. The AUD/GBP cross, spiked out of the previously tight trading range, to trade above 0.5300. Upward pressure remains.
The current interbank midrate is: AUDGBP 0.5290 GBPAUD 1.8903
The interbank range this week has been: AUDGBP 0.5237- 0.5297 GBPAUD 1.8877- 1.9093
The surprise inflation number in Australia spiked the local currency and jolted the cross-rates out of previously tight trading ranges. The AUD/EUR rate jumped sharply to 0.6180, booking gains against most major currencies. This support is likely to continue short term, as inflation is a renewed threat, while attention now turns to Jackson Hole.
The current interbank midrate is: AUDEUR 0.6171 EURAUD 1.6204
The interbank range this week has been: AUDEUR 0.6123- 0.6180 EURAUD 1.6181- 1.6330
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