USD Continues Gains Hand over Fist Post FOMC Meeting
AUD
The heavy start to the year continues for the beleaguered AUD which continues to slide heavily against the majority of it’s peers in the wake of Wednesday night's FOMC meeting, weak commodity prices and average risk sentiment. Local equities are also under the pump with the ASX200 down to it's lowest point since May last year and down 10% since the start of the year. With only relatively insignificant PPI data being released at 11:30am this morning, importers will be hoping the RBA offers a more optimistic tone at its first meeting of the year on Tuesday. Recent strong inflation and employment data may force the RBA to acknowledge the chance of interest rate hikes at some point this year (futures markets are pricing in 3 rate hikes in the next 12 months) which could potentially offer the importers some hope.
USD
The AUD is suffering at the hands of a overpowering USD, coming in at 0.7033 at the time of writing which is only 35 pips above the 18-month low. It's not just the AUD under the pump, the USD is strong against all comers with the DXY only 50bps below its 18 month high as markets price in the interest rate hikes telegraphed by the FOMC earlier in the week. The S&P 500 is down 0.5% from yesterday as the prospect of tighter lending conditions feed through into the corporate world. The US data early this morning was strong, with Advance GDP q/q showing a gain of 6.9%, up from an expected 5.3%. The number of American workers filing unemployment claims declined as expected this week, suggesting the country may be recovering from disruptions to the economy caused by the Omicron variant. The number of unemployment claims was down 30k to 260k, compared to the previous week’s revised tally of 290k. Looking ahead, Core PCE Price Index m/m will be released early morning Saturday, however Tuesday's RBA decision will be the next major data piece of note.
EUR
The AUDEUR is lower this morning with the AUD surviving a couple of tests of the psychological 0.63 level, currently trading at 0.6310. In yesterday’s news, German Gfk Consumer Climate data showed a better than expected result and the Spanish Unemployment Rate beat expectations at 13.3% despite a forecast of 14.2%. European equities performed well, with the DAX gaining 0.42%, and the CAC gaining 2.11% in the past 24 hours respectively. Upcoming data this evening includes French & Spanish Flash GDP q/q as well as German Prelim GDP q/q.
GBP
The AUDGBP is sitting at 0.5252 this morning which is the lowest in 5 months. The FTSE was performing well, gaining 1.86% in the past 24 hours and adding demand to the GBP. 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
The AUDNZD is coming in this morning at 1.0682 having briefly traded above the 1.07 handle yesterday. There is no news today in the space of NZ data, the next major release will no be until Thursday with the Kiwi employment report, however Tuesday afternoon's RBA meeting has the potential to stir some movement here.