• The US and Iran have remotely signed (electronically) a Memorandum of Understanding to end the war in Iran and open the Strait of Hormuz. This comes ahead of schedule which means the agreement is now in effect. The formal signing which is still to take place in Geneva was agreed by both parties with Iran’s foreign ministry suggesting electronically is the way to go. The White House under enormous pressure to get the deal done, Trump trying to justify conceding to Iran’s demands in a press conference. A meeting is still to take place today in Switzerland between delegates, should just be a formality.
• The Federal Reserve (FED) left interest rates unchanged yesterday at 3.75% with the new Fed Chair Warsh delivering his first statement. Voting unanimously in favour 12-0 for a hold with Warsh terminating the Fed’s “easing” bias, we now expect the Fed to remain on hold over the rest of 2026.
• Trump posts – “Oil is flowing”, oil prices dropped $2.90 per barrel to below the 200-day moving average settling around 76.50 a barrel.
• The Bank of Japan (BoJ) raised its cash rate from 0.75% to 1.0% a 3-decade high citing inflation issues arising from a weak Japanese Yen and the war in Iran. With oil prices soaring this has hit the Japanese economy hard since it imports nearly all its oil and gas supply.
• The Bank of England (BoE) left its interest rate at 3.75% by a majority 7-2 vote.
• The Australian Dollar (AUD) has been the strongest performer over the week on the main board while the Japanese Yen (JPY) has been the worst performer, again.
The Strait of Hormuz shipping traffic is slowly resuming after the US and Iran struck a deal (MOU) earlier in the week. Oil price has normalised to around 76.00 per barrel but it will take some time for shipping to get back to normal. The New Zealand Dollar (NZD) slumped to a 10-week low of 0.5750 against the preferred US Dollar (USD) this week even as “market sentiment” improved. Post the Fed rate announcement where they left their interest rate unchanged at 3.75% punters have unwound earlier buy positions. NZ GDP q/q came in at 0.8% as expected but it hasn’t been enough to fundamentally change the dovish NZD perspective. Also, of note the Fed has changed their policy slant to where they are not pricing in any further cuts. The kiwi will be doing well to avoid the strong support level at 0.5680 in the short to medium term.
The current interbank midrate is: NZDUSD 0.5751
The interbank range this week has been: NZDUSD 0.5744- 0.5862
The Reserve Bank of Australia (RBA) left their cash rate unchanged Tuesday at 4.35% as widely predicted signalling further hikes are on the cards. With inflation still elevated more rate rises are possible with forecasts expecting this to be at the August meeting. The caveat being if June quarter inflation prints high a repricing may be needed. NZ GDP for the March quarter printed at 0.8% as markets were predicted however this shows the NZ economy may have been in a stronger spot pre- Iran war than previously thought. Next week’s Aussie CPI and jobs data could give us decent swings in the cross. A break below 0.8200 (1.2200) levels and we could retest the recent low at 0.8145 (1.2280)
The current interbank midrate is: NZDAUD 0.8204 AUDNZD 1.2181
The interbank range this week has been: NZDAUD 0.8200- 0.8280 AUDNZD 1.2076- 1.2194
The New Zealand Dollar (NZD) managed to make a clean break off 0.4335 (2.3060) support levels midweek against the British Pound (GBP) clawing back losses to 0.4360 (2.2930) into early Friday. The Bank of England (BoE) left rates unchanged at 3.75% as predicted in a 7-2 vote. We now expect the central bank to hold rates over 2026 adjusted from a cut in July and start gradually cutting in 2027. We pick a rise through resistance at 0.4365 (2.2900) levels over the mid-term.
The current interbank midrate is: NZDGBP 0.4355 GBPNZD 2.2962
The interbank range this week has been: NZDGBP 0.4328- 0.4363 GBPNZD 2.2918- 2.3104
The Australian Dollar (AUD) has held ground over the week against the US Dollar (USD) trading into Friday around 0.7015. A slide below the key level at 0.7000 would confirm a 11-week low and fresh downside bias. The AUD looks to have lost market support after being at 0.7085 earlier in the week, perhaps led by a slump in Chinese manufacturing, energy prices falling and the Federal Reserve saying they are done with easing. The RBA remain hawkish after leaving rates unchanged at 4.35% earlier in the week, with underlying inflation still too high. Over 0.7000 still represents historically good buying of USD.
The current interbank midrate is: AUDUSD 0.7009
The interbank range this week has been: AUDUSD 0.6994- 0.7088
The best performing currency this week- the Australian Dollar (AUD), rallied against the British Pound (GBP) extending its run up from 0.5235 (1.9100) levels to clock 0.5320 (1.8800) this morning. Both the Bank of England (BoE) and Reserve Bank of Australia (RBA) left interest rates unchanged at 3.75% and 4.35% with RBA’s Bullock more hawkish with inflation risks remaining elevated. Earlier UK CPI printed lower than predicted at 2.8% y/y influencing weaker GBP moves. The long term high at 0.5400 (1.8550) now comes into focus.
The current interbank midrate is: AUDGBP 0.5307 GBPAUD 1.8843
The interbank range this week has been: AUDGBP 0.5256- 0.5317 GBPAUD 1.8807- 1.9025
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