• Markets rally as Netanyahu says the war will end much sooner than people think. “Iran has no capacity to enrich uranium or make ballistic missiles following 20 days of war”.
• US Federal Reserve Bank leaves interest rates unchanged at 3.75% stating a rate cut is more likely than not, citing the Iran war is a transitory inflation problem.
• The conflict in the strait of Hormuz is still causing massive disruptions to shipping traffic in the Gulf which carried around 20% of global oil and liquified gas products. Alternative routes are starting to ramp up with Saudi Arabia increasing flow through the East-West pipeline with the UAE making a similar move. At the moment the corridor has some 20,000 stranded seafarers stranded with hundreds of ships dropping anchor after the Tehran threatened to attack ships attempting to leave the gulf.
• New Zealand 4th quarter GDP came in at 0.2% well below forecasts of 0.5% and third quarter’s 0.9% raising concerns for a smooth ride out of recent tough economic times.
• The Bank of England (BoE) have left interest rates on hold overnight at 3.75% in a 0-9 vote signalling a hawkish stance as inflation risks rise from the Middle East conflict.
• The Bank of Japan (BoJ) held its cash rate at 0.75% in an 8-1 vote saying inflation risks were skewed to the upside due to offshore price pressures.
• ECB’s Lagarde has left interest rates unchanged this morning, the ECB president saying the Iran has heightened upside short term inflation risks making the outlook a lot more uncertain.
• The US Dollar (USD) is the strongest currency this week while the Euro (EUR) has been the worst performer
The New Zealand Dollar (NZD) has rallied off 0.5805 figures this morning against the US Dollar (USD) after comments from Netanyahu changed the tone of the conflict in Iran. The Israeli Prime Minister has made a big call saying Iran has lost the ability to make ballistic missiles and the war could end sooner than people think, the kiwi reaching 0.5890 post the headline before settling slightly lower. Earlier the Fed left interest rates at 3.75% suggesting rate cuts are still on the table with short term inflation blips not expected to go long term.
The current interbank midrate is: NZDUSD 0.5870
The interbank range this week has been: NZDUSD 0.5774- 0.5891
The New Zealand Dollar (NZD) pushed back off midweek lows around 0.8230 (1.2150) to clock 0.8290 (1.2060) early Friday. Earlier the Reserve Bank of Australia (RBA) hiked their interest rate to 4.10% from 3.85% as expected, the central bank citing the need to control short term inflation related energy spikes based on the conflict in Iran. RBA Bullock saying developments in the Middle East remain highly uncertain and that inflation was expected to remain above the 3.0% target for some time. We look to a possible retest of the 0.8360 (1.1960) zone for a breakout of the long term bear channel.
The current interbank midrate is: NZDAUD 0.8289 AUDNZD 1.2055
The interbank range this week has been: NZDAUD 0.8232- 0.8302 AUDNZD 1.2044- 1.2147
The Bank of England (BoE) unanimously voted 0-9 to leave the cash rate unchanged at 3.75% this morning amid ongoing geopolitical tensions in the Middle East. The central bank was more hawkish saying the short-term energy driven inflation forecast has lifted putting pressure on future policy. Meanwhile the New Zealand economy growth number for the 4th quarter of 2025 came in much lower than expected at 0.2% q/q vs 0.5% expectations and 0.9% in the third quarter. This shows us the economy remains fragile as the war in Iran shakes global certainty. Despite a small pull back by the New Zealand Dollar (NZD) this morning the British Pound (GBP) remains on top in a risk averse world.
The current interbank midrate is: NZDGBP 0.4372 GBPNZD 2.2872
The interbank range this week has been: NZDGBP 0.4361- 0.4403 GBPNZD 2.2711- 2.2927
Australian Dollar (AUD), US Dollar (USD) moves this week have been rangy with a slew of economic data and geopolitical headlines pushing around price. Early this morning the Netanyahu press conference sent risk products higher, the AUD pushing to 0.7110 as the Israeli Prime Minister said the war will end much sooner than people think as Iran lose the ability to make ballistic missiles and they are on the verge of victory. We shall see. The Fed have left rates unchanged at 3.75% as widely predicted Powell saying war related spikes to energy inflation products will be short-term and long-term CPI forecasts are still supporting rate cuts. A retest of 0.7120 and a breakthrough this level may signal a broader trend to the topside.
The current interbank midrate is: AUDUSD 0.7081
The interbank range this week has been: AUDUSD 0.6982- 0.7122
The Bank of England (BoE) left interest rates unchanged overnight at 3.75% as forecasted in an unanimous 0-9 vote the bank signalling short term Middle Eastern conflict related energy prices may underpin short term inflation spikes with the war shifting the tone due to geopolitical developments. The BoE now expect inflation to rise to 3.5% in the short-term saying and they will do everything to bring this back to their 2.0% target. On the chart the Australian Dollar (AUD), British Pound (GBP) has broken out of the bull trend momentum we have seen since early January this year dropping to 0.5265 (1.9000).
The current interbank midrate is: AUDGBP 0.5275 GBPAUD 1.8957
The interbank range this week has been: AUDGBP 0.5262- 0.5332 GBPAUD 1.8753- 1.9004
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