AUD Handing Back Last Week's Gains
AUD
The AUD continued to extend its losses this week and slides for the second consecutive day. Asian Equities faced further turbulence on Tuesday amid further market panic, with the Shanghai Comp down -2.4% and the Nikkei dipped -1.7%. The Australia share market fell sharply on Tuesday as volatile commodity prices from the previous day persisted in markets, the ASX closed -0.8%, below 7000 points. Gold is rallying with investors seeking safe-haven asset, gaining 3%, approaching the record high in August 2020. Little in the way of market moving data today, the economic docket will feature RBA Governor Lowe speaking this morning which may offer clues to the timing of an interest rate hike later in the year (May at the absolute earliest). Market participants may focus elsewhere in China as we await CPI & PPI data today with expectations that inflation should remain benign for February, whist PPI could continue to drop despite the recent surge in oil prices.
USD
The AUDUSD pair extended the previous day’s sharp retracement and slid form the .73 region to as low as 0.7246 before trading at a rate of 0.7266 this morning. US Equities jumped from their recent lows and posted gains on Monday with the S&P 500 up 0.8%, the Nasdaq up 0.7% while the Dow Jones closed modestly in the green 0.4%. US 10-year yields reversed the recent trend and rose 9bps to 1.86% while the immediate US ban on Russian energy (see below) saw crude oil rise 3.6% to $123.7 a barrel. A lack of macroeconomic data has markets watching cautiously for further impeding sanctions with Biden announcing a US ban on Russian oil, gas and other energy imports, adding that the decision was taken in close consultation with allies. Looking forward, there is little data among economic releases. Markets continue to be dominated by the mixed fundamental backdrop and geopolitical tension across the globe as global risk sentiment remains stagnant.
EUR
The AUDEUR witnessed some follow-through selling for the second consecutive day with the pair trading at a rate of 0.6662 at the time of writing. European Equities opened lower and managed to close with marginal losses, with the CAC down -0.3% while the DAX closed with next-to-no movement. With little macroeconomic data shifting sentiment overnight, markets latch onto hopes of a breakthrough in the dialogue between Russia and Ukraine. Looking forward on the domestic front, markets now await the outcome of Thursday's ECB Bank Policy meeting. There is the prospect of stagflation prompting economists to suggest that policymakers might delay a rate hike until the end of year and uncertainty remains the key theme.
GBP
The AUDGBP pared intraday losses and retraced earlier levels with the pair trading at a rate of 0.5547 at the time of writing. London’s FTSE 100 edged higher on Tuesday, aided by strong gains in the energy sector as oil prices jumped, the blue-chip index rose 0.1%. A quieter data week has the worsening situation in Ukraine overshadowing the markets optimism as investors remain concerned about further economic fallout. Adding to this, the recent gains in commodity prices such as Oil have been fuelling fears about inflation in the global economy. Apart from this, market participants remain their focus on the upcoming BoE meeting for March with expectations that the bank would go ahead with hiking interest rates in the next meeting.
NZD
The AUDNZD followed suit among its peers and continued to decline, dipping to as low as 1.0659 before coming back to trade at a rate of 1.0686. The market sentiment remains downbeat, as illustrated by losses in global equities and surging commodity prices. With a lack of local data spurring directional bias, the intensifying Russia-Ukraine conflict remains in the backdrop. The economic docket domestically does not have any market-moving news with the focus likely remaining on upcoming speak from RBA Phillip Lowe and Chinese PPI & CPI data.