Markets have been dominated by the Middle East war and the longer it drags on (or heaven forbid escalates), the worse markets will suffer. Safety flows have been pouring into the US Dollar and all energy dependent nations and their currencies have suffered accordingly. Economic data has been largely ignored, as they are a historical measure and the massive tsunami of inflation coming, has yet to be included. Inflation and global recession are likely outcomes unless there is a timely solution to the conflict. The war is destabilising markets and forcing a ‘major global energy crises’, which will have enormous flow-on effects to the world’s economy.
The war in the Middle East has dominated markets, for the last month, following the US/Israel attacks on Iran. A quarter of the world’s oil and gas comes from this region and supply has been cut by the closure of the Strait of Hormuz. The energy crises has triggered huge spikes in prices, across the world and the fear is global recession, if the conflict extends for any length of time. Commodity prices have been hit hard, as has the associated currencies, with the NZD falling from above 0.6000, to current levels around 0.5750. This trend is likely to continue, as long as the Middle East conflict does.
The current interbank midrate is: NZDUSD .5764
The interbank range this week has been: NZDUSD .5752 - .5878
The NZD/AUD cross rate had fallen to lows not seen since the GFC, falling to as low as 0.8240, as Australian inflation has spiked interest rates and supported the currency. The fears of a global recession has hit commodity prices hard and both currencies have taken a battering. The cross has been in a severe downward trend for the last year, collapsing from 0.9400, a year ago. The trend is likely to continue as interest rate differential attract currency flows.
The current interbank midrate is: NZDAUD .8365 AUDNZD 1.1953
The interbank range this week has been: NZDAUD .8335 - 8375 AUDNZD 1.1934 - 1.2084
The Middle East crises and the looming threat of a global recession, dominates the cross-rates, including the NZD/GBP. The rate has slipped from above 0.4400 to low 0.4300’s. Weak UK data and the strong safety flows to the US Dollar, have damaged the Pound, but the collapse of commodity prices has adversely impacted the cross rate. This is likely to continue unless there is a timely resolution to the Middle East conflict.
The current interbank midrate is: NZDGBP .4322 GBPNZD 2.3137
The interbank range this week has been: NZDGBP .4320 - .4371 GBPNZD 2.2877 - 2.3157
The NZD/EUR cross has fallen from over 0.5100, to below 0.5000, in the last week. This is a reflection of commodity prices being hammered, as fears of a global recession, hits commodity demand. The downside pressures are likely to continue, as long as the Middle East conflict continues.
The current interbank midrate is: NZDEUR .4995 EURNZD 2.0020
The interbank range this week has been: NZDEUR .4993 - .5058 EURNZD 1.9767 - 2.0030
The AUD had appreciated to 0.7200, in the last month, supported by rising interest rates and inflation. The RBA raised rates, at their last meeting, to combat resurgent and stubborn inflation. The interest rate differentials proved hard to resist and the AUD had surged. The Middle Eat crises has cause reality to bite hard and the AUD has suffered accordingly. The AUD has crashed to trade below 0.6900, as fears of a global recession grow and commodity demand is hammered. This reversal in trend is likely to continue for the duration of the Middle East conflict.
The current interbank midrate is:AUDUSD .6891
The interbank range this week has been:AUDUSD .6873 - .7047
The AUD/GBP cross rate has fallen sharply in the last couple of weeks, due to the impact of the collapse in commodity prices and the flow-on to the associated currencies. The cross-rate has stumbled from above 0.5300, to 0.5150, and is likely to fall further. The UK is hugely energy dependent and the Pound has also has suffered, but not to the degree of the heavily commodity influenced AUD.
The current interbank midrate is: AUDGBP .5167 GBPAUD 1.9353
The interbank range this week has been: AUDGBP .5165 - .5254 GBPAUD 1.9075 - 1.9358
The collapse in commodity demand and the associated currencies has impacted the AUD/EUR, which has tumbled from 0.6150 to below 0.6000. The growing fears of a global recession and plunging commodity prices, will ensure the trend continues, despite the weaker EUR. War delivers uncertainty and this Middle East crises damages all energy dependent nations.
The current interbank midrate is: AUDEUR .5971 EURAUD 1.6748
The interbank range this week has been: AUDEUR .5968 - .6067 EURAUD 1.6482 - 1.6754
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