FOMC Signals Rate Hike Cycle Imminent

AUD

Aussie is down against the majority of its trading peers this morning. The lack of local and Chinese data allowed the FOMC meeting in the United States to drive currency movement this morning. Yesterday the ASX was closed for the holiday yesterday, however Asian equities were mixed with the Shanghai Comp closing up 0.7%. There was little movement on the commodities side with both Iron Ore & Copper closing up 0.4% for the day respectively. Looking ahead in local news, markets can expect the monthly MI leading index which tallies 9 indicators of consumer confidence into the monthly survey. This will be followed by a release in quarterly import prices which measures the change in the price of goods purchased by importers. The risk based theme from the first half of the week has been replaced with markets now digesting the aftermath of the US Fed's meeting, however this could change quickly if the Ukraine scenario escalates.

USD

The AUDUSD is trading at a steep discount at 0.7113 this morning off the back of the FOMC meeting early this morning. The Fed left rates on hold at 0.25% as generally expected though were otherwise hawkish in saying that rates would rise soon, asset purchases would end in March with balance sheet shrinking to start after rate hikes commence. The Fed also reiterated their focus on tackling higher inflation going into year and that it is possible for consecutive rate hikes once the hike cycle begins. US Equities markets started the session strongly however reversed quickly after the Fed meeting, with the NASDAQ & Dow Jones closing down 0.25% & 0.7% respectively. Looking ahead markets can expect the quarterly Advance GDP figures followed by Core Durable goods figures and the change in weekly Unemployment Claims. This will be topped off with the release of monthly homes sales figures, so plenty of potential for movement.

EUR

AUDEUR opens at a familiar 0.6330 this morning. There was little in the way of data, however volatility from the FOMC meeting (see above) bled through into the AUDEUR and constrained AUD. European equity markets held gains into the close with the CAC and DAX closing a little over 2% each. Looking ahead markets can expect the German GfK Consumer Climate to survey consumer confidence which will be followed by the Quarterly Spanish Unemployment Rate which currently sits at a whopping 14.6%.

GBP

AUDGBP gave up ground overnight to trade at 0.5286 this morning, the AUD getting whacked in the aftermath of the US Fed meeting. UK equities saw gains similar to their European peers with the FTSE closing up 1.3%. Looking ahead, and the lack of UK data continues into the weekend with only monthly CBI Realized Sales figures due tonight. Thursday next week will see the all important Bank of England interest rate decision, with pundits mixed on whether rates will go higher, so should bring added volatility.

NZD

AUDNZD is trading at 1.0691 this morning having forged ahead to fresh six-month highs of 1.0726 overnight. New Zealand released its quarterly CPI figures this morning which printed at 1.4%, which was a 0.1% improvement from market expectations but almost half of the December figures. The NZD has failed to keep pace with the AUD of recent, covid settings across the ditch potentially dampening hopes of a speedy economic rebound.