RBNZ Makes Third Consecutive Interest Rates Hike

AUD

The Aussie dollar continues its hawkish ascent against its peers despite uncertain market conditions, as most major news seems transfixed on the situation unfolding in Ukraine. Yesterday morning we saw some positive local data with the Wage Price Index q/q coming in as expected at 0.7% slightly above the previous of 0.6%, which will please the RBA going in to Tuesday's next RBA meeting. In Equities we saw the ASX up 0.6%, the SHANGHAI COMP up 0.9%, while the NIKKEI fell by -1.7% In Commodities Gold remains flat at 0% while Iron Ore fell by 0.2%. No major data to come out of Aus markets for the day, with the only being the Private Capital Expenditure q/q which will be released at 11:30 this morning expected to be 2.6% against previous of -2.2%. Along with the developments in Ukraine, an eye should be kept on the collapse of local Aussie construction company Probuild which has uncomfortable comparisons with the Evergrande collapse in China.

USD

The Aussie continued its upward momentum against the Greenback achieving a one month high of 0.7283 where it finally met some resistance, currently finding itself at 0.7231 at time of writing. US Equities suffered all round with the DOW JONES down 1.1%, the S&P 500 down 1.5% and the NASDAQ fairing worst down by 1.9% in  high risk sensitive market conditions observing equity sell offs all-round. There was no major data out of the US overnight, with most eyes still fixed on eastern Europe. However, tonight we will receive a slew of data from the US in the form of Prelim GDP q/q, Unemployment Claims, Crude Oil Inventories data, and FOMC Member Mester speaking at a University of Delaware event. Markets will be focussing on possible Russian retaliation to the western sanctions imposed yesterday as well as potential cyber attacks. US intelligence officials believe a 'full scale' invasion is due within the next 48 hours.

EUR

The Aussie dollar continues its two and a half week climb against the Euro finally reaching resistance at an almost two-month highs of 0.6417, currently at 0.6390 at time of writing. In Equities the DAX was down -0.4% in a risk sensitive climate. Out of the Eurozone last night we received the German GfK Consumer Climate report down -8.1 worse than projected -6.2 and previous -6.7. Later the same night we saw Final CPI y/y data come in flat at projected 5.1%, same as previous 5.1%, along-side Final Core CPI y/y fairing just as stead at 2.3%. No economic data due from the EZ tonight, however with the leaders of Ukraine, Poland and Lithuania calling for a “swift introduction of robust sanctions” from the international community in a joint declaration with Ukrainian PM Zelenskiy, there is the potential for further sanctions to be announced tonight.

GBP

The Aussie Pound pair much like its contemporaries has seen a continuation of its upwards momentum until achieving resistance at almost two-month highs of 0.5355, currently trading just lower at 0.5333 at time of writing. Last night we had the Monetary Policy Report Hearings, during which Deputy Governor Ben Broadbent warned Bank of England policy makers face their toughest challenge since Britain crashed out of the European exchange rate mechanism 30 years ago. With inflation forecast to peak at over 7% the BOE is hesitant to raise rates too drastically out of fears of causing a cost of living crisis for households as cost of living soars. No concrete news on hikes as of yet, although markets expect further increases to around 2% by the end of this year. In Equities the FTSE was down 0.1%a long with most other global bourses. Tonight the UK markets will be focussed on Ukraine, although after midnight we will also have BOE Gov Bailey set to speak. 

NZD

The AUDNZD pair fell to one and a half month lows of 1.0669, currently at 1.0676. Both Commodity currencies have fared quite well in tumultuous market conditions despite expectations, yet our cousin from across the ditch has outperformed the AUD after the RBNZ increased cash rates to 1.0% yesterday. This was the third consecutive rate hike of 0.25 basis points, compared to the more patient RBA which has it's opportunity to update markets on monetary policy at their next meeting on Tuesday.