The Middle East war continues to dominate markets, adversely effecting equities, bonds and currencies. The war has placed enormous pressure on energy supply, the pricing and the flow-through into inflation. Economic data has taken a back seat, as it is measured historically and it is now all about oil and gas, in the here and now. Oil charged back to US$100p.b., once again, and will go higher if the war extends. The US Dollar is taken on ‘Mucho’ safe haven status, with the EUR plunging below 1.1450, while the GBP collapsed under 1.3250.
The surging safety of the reserve has taken its toll on commodity currencies, with the NZD now testing below 0.5800, while the AUD may surrender the ‘Big Figure’ of 0.7000. The AUD has been the best performer this last week, in a sea of red, as safety flows pour into the reserve. This was due to inflationary pressures within Australia and the expectation that the RBA will raise interest rates this coming week. Even the AUD was overwhelmed by weeks end.
