The ongoing energy/inflation emergency rolls on, building into a full-blown economic crisis in Europe. Inflation has caused havoc on international bond markets, already under extreme pressure from perpetual deficits/debt, leading to probable fiscal catastrophe. The flashing warning signals from European bond markets, made markets extremely nervous, with volatility in both currency and equity markets. This is likely to continue, as long as the precarious Middle East situation extends. Any solution, is not going to come until after the US midterm elections, scheduled for early November. Expect volatility and watch bond markets, as the proverbial ‘canary in the mineshaft’.
The NZD has remained in a very weak trading channel all week, fluctuating between lows of 0.5580 and highs around 0.5620. The trading range has been tight, as markets suffer high inflation, bond yield spikes, and risk-aversion. The energy crisis has rolled on, with no signs of progress in the Middle East, as prospects of all-out war increases. This has put upward pressure on bond yields, already an existential threat due to record debt levels, now suggesting a full-blown economic crisis. The NZD remains vulnerable to international markets.
The current interbank midrate is: NZDUSD 0.5607
The interbank range this week has been: NZDUSD 0.5579- 0.5627
New Zealand and Australia remain extremely vulnerable to international energy supply issues, as both Countries have ignored the ability to provide some sort of energy independence. Following the mantra of the ‘green transition,’ both Countries have opted not to develop fossil fuels needed to support a modern economy. This has led to a reliance on supply from offshore and the current energy crisis has exposed this Achilles heel. The cross rate has been relatively stable trading between 0.8030 and 0.8100.
The current interbank midrate is: NZDAUD 0.8052 AUDNZD 1.2411
The interbank range this week has been: NZDAUD 0.8023- 0.8080 AUDNZD 1.2375- 1.2464
The UK has become energy dependent, following the shut-down of the energy rich North Sea, for globalist climate ideology. The Norwegian Government has continued to develop oil and gas, from adjacent fields, building an enormous sovereign wealth fund in the process. The British have thus suffered terribly during this years’ Middle East triggered, energy crisis. The latest iteration is the diesel supply crisis, as the UK has become heavily dependent on US diesel exports and the Americans have threatened to cut exports. The NZD/GBP cross-rate has been tight, trading between 0.4320 and 0.4380, as both Countries suffer the energy dependence problem.
The current interbank midrate is: NZDGBP 0.4235 GBPNZD 2.3612
The interbank range this week has been: NZDGBP 0.4225- 0.4243 GBPNZD 2.3564- 2.3664
Europe is heavily dependent on foreign energy and thus has been completely exposed by the current energy supply crisis, dominating world markets for much of the last year. European bond yields have been testing record levels, especially the Franch bonds, further impaired by the political chaos engulfing the Country. The EUR crashed below 1.1200 agst the greenback, dragged lower by surging inflation, fiscal pressures, and panic in the bond markets. The cross-rate with the NZD topped 0.5000, despite corresponding weakness in the KIWI.
The current interbank midrate is: NZDEUR 0.4996 EURNZD 2.0016
The interbank range this week has been: NZDEUR 0.4982- 0.5014 EURNZD 1.9943- 2.0071
The AUD has recovered marginally, from earlier lows of below 0.6900, to trade around 0.6950. Resurgent inflation, has led the RBA to begin to raise interest rates once again, pushing the economy into testing economic conditions. The energy/inflation crises hit the AUD hard, as it has the economy, with the currency tumbling despite rising interest rates. There is a fiscal crisis brewing and this could manifest into a political dilemma. The AUD remains extremely vulnerable to desperate international economic conditions.
The current interbank midrate is: AUDUSD 0.6963
The interbank range this week has been: AUDUSD 0.6931- 0.6988
The AUD/GBP cross-rate has traded between 0.5240 (1.9085) and 0.5275 (1.8960), over the last week, as both Country’s suffer the energy/inflation crisis. This tight trading range, is due to weakness in both currencies, arising from extreme vulnerabilities to energy supply issues. The UK is extremely dependent on US supplies, especially in diesel, which has become a real issue over the last month. Watch the UK Gilt market closely for hints on the economy and the currency performance.
The current interbank midrate is: AUDGBP 0.5260 GBPAUD 1.9011
The interbank range this week has been: AUDGBP 0.5249- 0.5278 GBPAUD 1.8946- 1.9048
The EUR has been hit hard by the growing global economic crises, plunging below 1.1200 agst the Big Dollar, manifesting into a chaotic political crisis in France. French bonds have surged to levels not seen since the Global Financial Crisis, flashing red lights to markets. The French minority Government, have not been able to pass a budget since re-election, sending France towards a fiscal crisis. The AUD/EUR cross has pushed over 0.6200 (1.6130), despite real weakness in the AUD, which is likely to continue.
The current interbank midrate is: AUDEUR 0.6207 EURAUD 1.6110
The interbank range this week has been: AUDEUR 0.6177- 0.6232 EURAUD 1.6046- 1.6188
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