Risk Aversion Hits Stocks and AUD Hard

AUD

Risk appetite is running for the hills as the situation in Ukraine intensifies, the Aussie Dollar continue to plummet against its peers. Yesterday both the US and UK removed their ambassadors from Ukraine and Australia has issued a travel warning, all of which indicate an escalation in an already volatile situation. Equities around the globe were down, however Asian bourses performed better than most; the ASX down -0.5%, the NIKKEI up 0.2% and the SHANGHAI COMP holding steady with no change. In commodities, we saw no change in the price of gold but a loss of 0.7% in Iron Ore. Local data kicks of with a bang shortly with Australia’s Q4 CPI and Trimmed Mean CPI to be released today at 11:30am (AEST) which will be closely watched by the RBA as one of several key inputs to determine the immediate future of its Bond Purchase Program and a key influential factor for future rate hikes. Currently the forecast predicts 1.0% increased inflation against the 0.8% seen previously. A strong CPI result today when coupled with last week's glowing Employment Report will surely pressure the RBA to change it's tune in its next meeting in a week from today. Obviously any further escalation in the Ukraine will heavily affect AUD movements.

USD

The Aussie still down against the US, finding itself plummeting to lows of 0.7090 (1month low) before finding support and currently trading at 0.71452 at time of writing. Out of the US we saw the release of the Flash Manufacturing PMI at 55.0 slightly down against forecasted 56.9 and previous 57.7. Similarly the Flash Services PMI was also lower at 50.9 against forecasted 54.9 and previous 57.6. US Equities followed the global trend; DOW JONES down by -2.0%, NASDAQ similarly down -2.0% while the S&P 500 fared the worst down -2.6%. Looking ahead the market waits in preparation for the FOMC Statement and Press Conference early Thursday morning followed by the Federal Funds Rate forecasted to sit at par <0.25%. This Friday we will also see GDP and Unemployment data, followed by Consumer sentiment and Core PCE Price Index data on Saturday. So, it will be quite an eventful week in terms of US data later this week, whilst also keeping an eye firmly on the Russia/Ukraine situation.
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EUR

The AUDEUR pair faired similarly, descending to lows of 0.627 before reclaiming the 0.63 handle, currently at 0.6307 at time of writing. Out of the Eurozone we saw a slew of data Monday afternoon. French Flash Services PMI was coming out lower at 53.1 against forecasted 55.3 and previous 57.0, while French Flash Manufacturing PMI was basically par at 55.5. German Flash Manufacturing PMI fared better at 60.5 against projected 56.9 and previous 57.4, with German Flash Services PMI similarly up at 52.2 above projected 47.9 and previous 48.7. As a result, we saw overall European Flash Manufacturing PMI better at 59.0 compared to projected 57.6 and previous 58.0, with Flash Services PMI slightly lower at 51.2 against forecasted 51.9 and previous 53.1. European equity markets suffered further declines into the close to end the day with heavy losses the DAX down a massive -3.8%. Looking ahead today we will see the German ifo Business Climate release and a number of Spanish German and French data releases around GDP, Loans and Money supply and unemployment.

GBP

The Aussie faired slightly better against the GBP, still losing ground to a low of 0.5268, finding support and currently trading flat compared to yesterday at 0.5292. In UK data last night we saw the Flash Manufacturing PMI not quite meeting expectations at 56.9 against forecasted 57.7 and previous 57.9, Flash Services PMI released slightly off mark at 53.3 actual against forecast 53.9 and previous of 53.6.UK Equities suffered similarly to the majority of the global market with the FTSE down-2.6%. No data due for release from the UK tonight.

NZD

The AUDNZD pair trading slightly lower with both risk currencies heavily influenced by high market volatility, currently trading at 1.06641 rebounding off a low of 1.06345. Generally quiet as usual in regards to data from our little cousin across the ditch. Looking ahead we will see a Trade Balance release Wednesday Morning, but more importantly we will be seeing NZ CPI data on Thursday morning currently forecast at 1.3% against previous 2.2%. A good CPI print will keep pressure on the RBNZ to continue its recent rate hike cycle.