AUD, NZD, EUR, USD FX and Interest Rates

AUD, NZD, EUR, USD FX and Interest Rates
RBA interest rates at top end Bank Bills at the 1 month monthly maturity current 1.86 hasn’t been seen since early November and the current drop is the result from 2.05 highs on January 3rd. A miraculous drop by RBA’s deeply range bound interest rate standards.
Now AUD is deeply converging against low low NZD then ultra low USD from a curve average perspective. Not many basis points separates USD V NZD V AUD yet both NZD and AUD trade in conventional positions above USD from a curve perspective but maturities trade below USD.
If AUD correlations remain off klter to interest rates and interest rates head higher then AUD is set for a deep drop.
Smart as usual is the RBNZ and clearly brilliant to see and adjust to any market storms. They automatically adjust rates to hold NZD in check.
The ECB and EUR as usual remains comatose as bottom maturity at -0.110 began a steady drop over last 5 weeks from -0.120 to support EUR yet its curve averages are skyrocket high against AUD, USD and NZD.
This forced EUR containment and ability to not break its major high / low break at today’s 1.1390.
USD curve averages are scary low against maturities miles high above counterparts EUR, AUD, NZD. Explains dead DXY and no relief in sight.
                 Brian Twomey

 

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