Our weekly market updates cover all the big currency changes you need to know about when sending money overseas.
The story this week is once again driven by conflict in the Middle East causing market volatility. As the conflict continues, markets are placed under significant pressure by rising oil prices. The closure of the Strait of Hormuz has accounted for an approximate 6% loss in global oil supply, with the International Energy Agency (IEA) stating that the war has created the “largest supply disruption in the history of the global oil market”.
Updates to watch this week
Interest Rate Announcement
All eyes are on the RBA this week after Deputy Governor Andrew Hauser’s comments regarding the bank’s focus on inflation, with the updated cash rate to be announced tomorrow afternoon. As inflation is pushed towards the 4-5% mark, significantly over the RBA’s target 2-3%, rumours hedge towards seeing a further rate increase to combat rising numbers. Rate changes from the RBA are all the more noteworthy now, with Chalmer’s Federal Budget due in a number of weeks on the 12th of May.
AUD Down Against the USD
The AUD is down against the USD at market open this week, sitting at 0.6991. This is not surprising given current inflationary pressures and the safe-haven demand on the USD. Raising the cash rate generally has a strengthening effect on the AUD, so keep an eye on the rate tomorrow afternoon, we may potentially see some changes if that happens.
USD Safe Haven
The greenback has continued to be bolstered by the safe-haven demand caused by the conflict in the Middle East along with rising oil prices (which always bode well for the USD). With US inflation coming in at 2.4%, as expected, the dollar is regaining much of the ground lost at the start of the year. Though as energy prices rise, this may look different in the future. PPI data and Federal interest rate decisions are expected out of the US on Wednesday and Thursday this week, respectively.
Major currency movements
AUD NZD
The AUDNZD rate hit the 1.2 mark early last week, reaching 1.2082 (NZDAUD 0.8279) at market open this morning. This is the highest rate we have seen since June 2013. The rate had been increasing since the beginning of the conflict, but it seems RBA’s Andrew Hauser’s comments last week pushed the rate up to this decade high. The NZDUSD rate has continued to drop, the market opened at 0.5784 this morning. Updated GDP figures are expected out of NZ this week, which may see to some rate changes given the predicted drop in figures.
GBP
Over in the UK the sterling continues to face troubles. Inflation is still the biggest contender here, though continued negative sentiment regarding Starmer’s leadership is still at play. The GBPUSD rate has opened today with a continued decline (1.3233), and the AUDGBP rate has fallen slightly, though still strong on the AUD side at 0.5283. The Monetary Policy Summary and bank rate are expected from the Bank of England this Thursday, so it will be interesting to see how the rate responds accordingly.
EURO
It is worth noting that the GBP is still faring better than the EUR at this stage, though not unexpected as the GBP is far less vulnerable to international conflict. With a strong USD and high energy prices in the eurozone, the euro is struggling to maintain strength. ECB rates will be announced this Friday, with strong feelings from the market that the rate will remain as is. AUDEUR sits at 0.6122, down slightly from last week.
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