The AI correction appears to be well and truly over, in terms of market runs, although massive overinvestment/overvaluation remains a booby-trap for markets. Global sentiment is the key to equity, bond and currency market. US Labour markets remain weak and this has increased pressure on the Federal Reserve to make a final rate cut, in their last meeting of 2025. All attention will be on the Fed this coming week and any failure to cut, will be reflected in the equity and currency markets. Market insiders have also been focused on the reversal of the ‘Yen carry trade’, which has cause mayhem in US denominated assets, especially the crypto market.
The RBNZ cut official rates to 2.25%, as expected, but projected that this would be the last of the cuts in the recent cycle and rate rises may be considered in 2026. This was an immediate boost to the KIWI, which jumped from the low 0.5600 level, heading back towards 0.5800. Interest rate differentials have been killing the currency, but the prospect of differentials narrowing, have been a major boost. Stronger economic data in NZ, led by business confidence, has also provided some optimism for the NZD.
The current interbank midrate is: NZDUSD .5760
The interbank range this week has been: NZDUSD .5705 - .5776
The NZD/AUD cross rate has fallen to more than decade lows, of just above 0.8600, as the RBNZ aggressively cut rate in the recent cycle. This was signalled to end by the RBNZ, in their last meeting, adding rates may rise in 2026. This was a boost to the NZD, with the cross-rate jumping to trade around 0.8750. Interest rate differential remains very attractive so expect flows to the Australian currency to continue.
The current interbank midrate is: NZDAUD .8715 AUDNZD 1.1472
The interbank range this week has been: NZDAUD .8712 - .8762 AUDNZD 1.1430 - 1.1474
The AUD/EUR cross rate has pushed back up to 0.5675, due to flows back into the AUD. The strong performance of the Australian $$, has been across the board, and reflects stronger economic data and the RBA’s inclination to hold rates at elevated levels. This is likely to continue if the economy continues to improve and inflation remains hot.
The current interbank midrate is: AUDEUR .5675 EURAUD 1.7621
The interbank range this week has been: AUDEUR .5631 - .5679 EURAUD 1.7607 - 1.7754
Fears over the AI bubble have subsided, as has the flight to the safety, of the US Dollar. The EUR has zoomed back to 1.1650 and managed to book gains but has been outperformed by the KIWI. The NZD/EUR cross has jumped to 0.4950, due the rebound in the KIWI, which may continue if NZ economic news continues to improve.
The current interbank midrate is: NZDEUR .4950 EURNZD 2.0202
The interbank range this week has been: NZDEUR .4920 - .4952 EURNZD 2.0188 - 2.0316
The UK budget was a tax and spend budget, as expected, but was welcomed by markets, as Gilt yields stabilised and the currency staged a recovery rally. The cross rate with the NZD has fallen back towards 0.4300, due to the overperformance of the GBP. The UK economy remains in dire straits so watch the Gilt Yields for an indicator. The continued improvement in the KIWI should see the cross rate improve, with GBP downside likely.
The current interbank midrate is: NZDGBP .4325 GBPNZD 2.3120
The interbank range this week has been: NZDGBP .4314 - .4348 GBPNZD 2.2995 - 2.3176
The AUD has been under pressure, in recent times, due to volatility from global markets and risk aversion sentiment. The AI bubble scare, appears to be in the rear-view mirror and with global confidence on the rise, so have the fortunes of the Australian Dollar. Stronger economic data, led by robust GDP growth numbers, have also boosted the currency. The AUD has managed to regain 0.6600 and may benefit further improvement, in global market sentiment.
The current interbank midrate is: AUDUSD .6610
The interbank range this week has been: AUDUSD .6518 - .6620
The Australian currency has been a strong performer but has been outdone by the flying Pound. The UK Budget was well received by markets and was a big boost to the currency. The AUD/GBP cross has fallen back towards 0.4900, but remains under question, as the UK economic turmoil remains an existential threat.
The current interbank midrate is: AUDGBP .4960 GBPAUD 2.0161
The interbank range this week has been: AUDGBP .4933 - .4976 GBPAUD 2.0089 - 2.0268
