Local Employment Data Due This Morning

AUD

The AUD was mixed if not relatively subdued against the major G10 currencies overnight. Asian Equities were mostly at opposite ends of trade with the Shanghai Comp down -0.8% while the Nikkei had a stellar performance after closing up 1.9%, the biggest gain in more than three weeks. The ASX 200 closed up 0.3% on Wednesday as the mining sector dragged the Index into the green. A lack of domestic data in the last 24-hour period had participants continue their focus elsewhere as the Russo-Ukraine conflict continues. Looking ahead and in Australia today, all eyes will be on the March labour report at 11.30am with some analysts forecasting unemployment to have dipped to 3.9% from 4% in February. The ABS have noted that last month’s flooding in QLD and NSW could affect the survey outcomes in some affected regions. Keep an eye on the ECB interest rate decision tonight as well (see below for more).

USD

The AUDUSD ground lower dipping to as low as 0.7391 before coming back to trade at a rate of 0.7452 this morning. US Equities rallied as corporate earnings season kicked off with mostly positive results while traders looked past surging inflation figures. The NASDAQ gained 2.0%, the S&P up 1.12%, while the Dow Jones finished closely behind up 1.01%. U.S yields edged fractionally lower and oil made strong gains to close at $104.22. In the event on Wednesday, the US Economic docket featured the Producer Price Index (PPI) for March, with the reading rising 11.2% YoY, much higher than expected and the most significant increase since 2010, emphasizing that inflation is much higher than initially anticipated as producers get ready to pass on costs to customers, meanwhile core PPI for the same period, which excludes food and energy, increased 9.2% YoY. Market participants now look forward to the domestic docket this evening which features the release of US Retail Sales data for March, followed by Unemployment Claims.

EUR

The AUDEUR retreated from yesterday's brief dalliance at 0.69, with the pair now trading at a rate of 0.6842 at the time of writing. European Equities were little changed on Wednesday as the corporate earnings season and record inflation figures weighed down, the DAX closed down -0.3% while the CAC had little gains up 0.1%. There was a lack of any market moving domestic data in the European session with traders further awaiting the ECB’s policy decision this evening, which could show some escalating concerns over the inflation outlook. Since the March decision to speed up QE tapering, inflation has accelerated further and is now running at 7.5%. ECB’s Chief Economist Lane has continued to front the situation, but signs of unease are growing in the Governing Council. In March, the ECB outlined two scenarios, both involved higher inflation than the baseline assumptions, ECB members could tonight be asked which scenario the Eurozone are most tracking closely. Potential for volatility over this decision and the subsequent press conference tonight.

GBP

The AUDGBP continues to grind lower and hangs onto the multi-week lows, with the pair trading at a rate of 0.5674 at the time of writing. The FTSE 100 edges only slightly into the green at the close, the London Benchmark was almost unchanged at 7,581 points to 0.06% gain. Overnight, the UK Docket featured inflation figures, led by the Inflation Rate for March, which expanded by 7%, in line with expectations but higher than the March 6.2%, the highest in 30 years as the cost of living of surges and shows no signs of easing. The ONS (Office of National Statistics) said petrol prices were among the driving factors for the March figure. Market futures have now priced in a 25bps rate hike by the BoE meeting on May 5th. Looking ahead there is no data among the release with the Easter Break approaching us.

NZD

The AUDNZD pair bucked the trend and continued its bid tone to print as high as 1.09720, a fresh two-year high, trading at a rate of 1.09563 this morning. In the event on Wednesday, the RBNZ lifted the OCR (Official Cash Rate) by 50bps to 1.5% as the central bank aggressively combats rising inflation figures. Meanwhile market participants will now look ahead toward next week’s CPI data with estimates of the headline CPI inflation to rise to 7.4% in Q1, up from 5.9% in Q4. The RBNZ still may rein in on surging domestic inflation pressures which may speak to another 50bps hike in May.