Equities Under Pressure as US Rate Hikes Loom

AUD

The AUD had a subdued session, if not trading marginally higher across the majors this morning. Asian Equities were mixed overnight with the Shanghai Comp up 0.4% and the Nikkei closed with no movement at 7445 points. The Australian Share market followed a negative lead from Wall Street, where a tech sell-off over recent weeks dragged equities lower. The ASX fell 6.2 points, a modest 0.1%. It’s another quiet day for data where Australian Retail Sales and Trade Balance are both expected to be closely watched by investors, but is unlikely to be market moving. The fast-paced Omicron concerns remain heightened in both Australia and Asia, given the surge in reported cases in the region, specifically India and Thailand and China, where citizens worry about a new local lockdown.

USD

The AUDUSD struggled to regain the 72 handle, seesawing to as high as 0.7201 before coming back to trade at a rate of 0.7174 this morning. US Equities extended their losses on Monday with all three majors in the red, with the Dow Jones down -0.8%, the S&P down 0.7% and the Nasdaq down 0.9%, its lowest level in nearly three months. U.S interest rates continued to tick up with the 10 year note now returning 1.775% and Oil was trading 1% lower. In lower tier data overnight, the US Economic docket featured Wholesale inventories for November, up 1.4%, higher than the 1.2% estimated. There is a lack of local economic data out of the US today, traders are expected to look elsewhere, with local Aussie data being the highlight.

EUR

The AUDEUR pushed marginally higher to trade at highs of 0.6357 before coming back to trade at a rate of 0.6330 at the time of writing. European Equities dipped and closed significantly in the red with the CAC down -1.4% and the DAX -1.1%. It was quiet on the data front with EZ unemployment for November coming in at 7.2% as expected. The Eurozone jobless rate dropped again in November 2021, official figures showed yesterday, as hiring withstood new covid outbreaks in several countries. The Eurostat, said the seasonally adjusted jobless rate dipped 7.2% in November from 7.3% in October. Meanwhile, investor sentiment in the eurozone rose in January, a survey showed yesterday. Sentix investor confidence survey improved to 14.9 from 13.5 month on month. Little in way of microdata with Italian Retail Sales being the only mention.

GBP

The AUDGBP failed to break the 53 handle overnight, as the pair pushed to as high as 0.5299 before trading at a rate of 0.5281 this morning. UK’s blue-chip index ended lower on Monday as housebuilders were hit by $5.4 billion in costs to remove cladding from buildings. The FTSE ended 0.5% lower. Little in the way of pound data to start the week off as Omicron remains to be the key theme for market movement. British Prime Minister Boris Johnson said on Monday that they are looking at the possibility of reducing the quarantine period to five days from seven. Johnson further added that they are making great progress in seeing off Omicron but noted that the number of cases in the hospital was still increasing. "Around 30% of cases were contracted in hospital, this is not acceptable” he said.

NZD

The AUDNZD followed suit among the majors overnight, with the pair trading at a rate of 1.06051, similar levels seen to Monday. The Kiwi pair has remained relatively steady this month with both currencies trading among the other. As mentioned in Monday’s report, macroeconomic data across the ditch doesn’t really pick up until next week, traders are expected to eye off todays retail sales figures in Australia.