Tensions in the Middle East are bolstering the US Dollar as energy prices rise and Fed officials remain hawkish. Concurrently, the RBNZ's hawkish hold has triggered a sharp correction in the AUD/NZD pair.
Key Takeaways
- 1.Renewed military conflict between the US and Iran is creating upside risks for the USD through energy price spikes and heightened inflation concerns.
- 2.The AUD/NZD pair experienced its largest one-day decline since 2016 (1.5%) as the RBNZ signaled future rate hikes, contrasting with a more measured RBA.
- 3.Fed officials are emphasizing inflation risks over growth, with potential for renewed US yield increases if Middle East peace prospects do not improve.
Table of Contents
- USD: Concerns grow over renewed military conflict
- AUD/NZD: Popular trade unravels
- KEY RELEASES AND EVENTS
- CERTIFICATION
- LEGAL ENTITIES AND BRANCHES
- GENERAL DISCLAIMERS
- COUNTRY AND REGION SPECIFIC DISCLAIMERS
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Authors
Derek HalpennyAbdul-Ahad Lockhart
Securities
DXYAUDNZDBrent Crude
Themes
Geopolitical Risk and FX VolatilityMonetary Policy Divergence
Regions
Middle EastNorth AmericaAsia PacificUnited StatesNew ZealandAustralia