• Markets stay risk on as geopolitics cool heading towards the weekend.
• Equities push higher to record new highs and global inflation risks keep central banks in a “wait and see” mode.
• The IMF are forecasting a global recession as growth forecasts have been slashed and inflation rises.
• The US Navy Sea blockade against all vessels entering or leaving ports around Iran is still in force.
• RBA may hike rates sooner than expected as crude outlooks muddy the inflation outlook.
• Australian unemployment remains at 4.3%
• The US are likely to hold back delivery of weapons to European allies due to the strain on stockpiles used in the Iran war.
• The Australian Dollar (AUD) has been the strongest currency in the past week while the Euro (EUR) has been the worst performer.
The New Zealand Dollar (NZD) has held levels around 0.5900 over the week as risk sentiment remains positive in the Iran/US conflict. Retreating crude oil prices off 113.00 to 93.00 this morning has supported demand in risk products. The kiwi reaching the mid March high of 0.5920 late in NY. Next week’s CPI for the March quarter is next week’s key data and should give us clues of how the war is affecting local economic conditions. Topside moves in the NZD look overbought to us so expect a pull back of sorts.
The current interbank midrate is: NZDUSD 0.5885
The interbank range this week has been: NZDUSD 0.5791- 0.5921
The Australian Dollar (AUD) remains hot against the New Zealand Dollar (NZD), cross reaching 0.8225 (1.2160) earlier today. Australia’s labour market remains resilient with a 4.3% unemployment rate publishing for March, reinforcing views the Reserve Bank of Australia (RBA) will continue with their tightening bias, all the while helping underpin the AUD against not only the NZD but across most major crosses. Sellers of AUD should consider at these historic lows.
The current interbank midrate is: NZDAUD 0.8218 AUDNZD 1.2159
The interbank range this week has been: NZDAUD 0.8208- 0.8304 AUDNZD 1.2041- 1.2183
The New Zealand Dollar (NZD), British Pound (GBP) cross has traded predominantly sideways over the week pivoting around 0.4345 (2.3000) areas. Geopolitical tension has improved over the week with no real impactful headlines affecting this cross from the open. Bank of England’s Bailey spoke yesterday saying he was concerned around cybersecurity dangers around AI intelligence. Meanwhile the central bank will not rush rate hikes just yet as they watch for inflation rises. Risks to the downside remain for the kiwi.
The current interbank midrate is: NZDGBP 0.4351 GBPNZD 2.2983
The interbank range this week has been: NZDGBP 0.4333- 0.4363 GBPNZD 2.2919- 2.3077
The Australian Dollar (AUD) has been the standout performer this week coming off a shaky open around 0.6980 numbers the currency has pushed up to 0.7195 in overnight NY conditions against the US Dollar (USD). Notable improvement in risk markets has buoyed the AUD to 5-week highs as geo conditions improved in Iran with Crude Oil prices dropping hard to around 83.00 a barrel. The Fed has eased back on expectations of aggressively tightening policy although the next move could be a hike if inflation worsens. If we get a weekly close above 0.7160, we will clock the June 2022 high.
The current interbank midrate is: AUDUSD 0.7161
The interbank range this week has been: AUDUSD 0.6986- 0.7195
With markets back feeling better about buying risk products the Australian Dollar (AUD) has tracked higher over the week against the British Pound (GBP) to reaching 0.5300 (1.8860) this morning. The Australian labour market remains robust with unemployment printing at 4.3% as expected. This could persuade the RBA to push for a more restrictive territory supporting the Aussie. We expect to see a pullback reversal prior to the weekend close towards 0.5265 (1.9000)
The current interbank midrate is: AUDGBP 0.5294 GBPAUD 1.8889
The interbank range this week has been: AUDGBP 0.5227- 0.5304 GBPAUD 1.8852- 1.9130
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