Markets were calm overnight, as hopes of a US/Iran peace agreement appeared to be building momentum, despite more military action from the US. There is talk of a ‘Memorandum Of Understanding’, which may proceed, laying the groundwork for a final agreement. The price of oil was softer, falling back to US$88.90/barrel, relieving pressure on markets. Bond yields were generally softer, except for the German Bund, which may reflect some domestic political upheaval, going on behind the scenes. The EUR gained ground, trading back to 1.1650, while the GBP settle just below 1.3450.Commodity currencies charged forward overnight, as the AUD spiked to 0.7170, while the NZD surged to 0.5930. The ‘hawkish’ RBNZ decision has manifested in support for the KIWI, as expectations are now for higher interest rates, while the NZ Budget was warmly regarded by markets. The Budget announced an earlier return to surplus, than was expected, due mainly to increased revenue streams. Tax revenues are projected much higher due to inflationary pressures and bracket creep, while GDP growth suffers accordingly.
