Collinson FX: Oct 10: Political turmoil creates uncertainty, and fallback to safe positions
by Collinson FX 9 Oct 2025 05:49 BST
7 October 2025
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Oct 10: NZ Dollar drops on back of OCR cut
US equity markets pulled back from record highs, while the US Dollar continues to bank big gains, across the board. The EUR plunged to 1.1550, while the GBP crashed under 1.3300. The rally in the Dollar was a safety play, rather than any shift, based on fundamentals.
There has been a distinct lack of economic data releases, due to the US Government shutdown, while politics takes a front seat. French President Macron appears to be ready to name a new PM, but this will only end in further disaster, as he does not have the support of Parliament or the people.
The surging reserve hammered commodity currencies, with the AUD falling to 0.6550, while the NZD dropped below 0.5750. Political turmoil creates uncertainty, and this is driving the road towards safety.
Oct 9: NZ Dollar drops on back of OCR cut
US equity markets rebounded strongly overnight, despite the US Government shutdown, as did the US Dollar. The EUR crashed back to 1.1600, while the GBP slumped to 1.3370. Gold continued to post record levels, surging through USD$4,000, considered a safety move, but also a reflection of the ‘fiat’ currency value. Political problems continue to dog markets both sides of the Atlantic.
The RBNZ surprised markets with a 50 basis point rate cut to the OCR. Markets were expecting a cut, but the magnitude was the surprise. The RBNZ citied weak economic conditions, which most suffering the recessionary economic conditions, were well aware of. This was a desperate action, offering monetary stimulus, to a terrible fiscal economic situation. The NZD slumped as a result, tumbling to 0.5750, while the AUD trades below 0.6600.
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Oct 8: Gold gains 40% in just 12 months
Markets are beginning to show signs of negativity, despite many equity markets trading just below record highs. The US Government shutdown rolls into the second week, while the French Government has resigned and remains in limbo, awaiting ‘Napolean’s’ latest rendition of his version of democracy.
The EURO Dollar headed lower, while gold touched USD$4,000 overnight, with gains of more than 40% this year alone. Fiat currencies are under pressure, with the EUR also falling below 1.1700, while the GBP trades 1.3440.The new Japanese PM has been welcomed with record share markets, but bond yields have also risen to record highs, while the Yen is crashing.
Commodity currencies are also weakening, with the AUD trading around 0.6580, while the NZD tests the downside of 0.5800. This is ahead of the latest RBNZ rate decision, who are expected to cut rates further, to stimulate the recessionary economy.
Oct 7: Markets nervous over political turmoil
Political turmoil appears to be spreading across the Western world and markets are getting nervous.
The newly appointed French PM, Lecornu, has suddenly resigned after less than a month. He is the latest of five PM’s, in the last couple of years, reflecting the lack of political power and credibility of the Macron regime.
Bond yields appear to be on the rise. The EUR trades around 1.1700, while the GBP holds above 1.3450, despite surging Gold yields.The softer reserve allowed the AUD to consolidate above 0.6600, while the NZD trades above 0.5800.
Australian inflation data confirmed the upward inflationary pressures and verified the last hold in rates, from the RBA.
In New Zealand, the RBNZ is expected to cut rates tomorrow, Wednesday October 8, as the recessionary economy screams for stimulus.
A new PM was also elevated in Japan, the first woman to have held the post, and markets celebrated the supposed conservative appointee.
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