Interest Rates Go Higher in Enlgand and Switzerland

AUD

The Aussie Dollar has delivered mixed performance, even with improved risk appetite on the menu, the Aussie gave back any short-lived recent gains in a volatile session for currency markets. Asian equities were mixed on the close with the Hang Seng +1.9% and Nikkei -0.2%. The ASX finished Thursday’s session -0.7%, with materials and energy leading the fall. Commodities couldn’t offer any support for the AUD, with both Gold and Iron Ore trading in negative territory, losing -0.1% and -0.3% respectively. The Asia Pacific macro-economic calendar was bone-dry yesterday, no data. This morning will see Australia release Flash Manufacturing and Services PMI’s, with both previous readings just holding onto positive territory of 50.5 and 50.7 respectively.

USD

The AUDUSD gained over 1% and reached as high as 0.6755 overnight before retracing those movements to only trade 10 basis points higher than yesterday's open, now trading at 0.6688. US Equities finding some traction amidst question marks and pressure in the US banking sector, the NASDAQ closed +1.1% higher, while the Dow Jones and the S&P 500 both closed +0.4% higher. In data from the US, Weekly Unemployment Claims dropped unexpectedly in the week ended March 18 to 191,000, the lowest in three weeks. US New Home Sales rose 1.1% to 640,000 (annual rate) in February, slightly below expectations. Late on the day, the deterioration in market sentiment boosted Treasury Bonds. The US 10-year yield settled at 3.39%, the lowest in three days. Despite the moves in the bond market, the US Dollar Index rebounded, ending with marginal gains above 102.50. US PMIs will be the next major piece of data, due for release early tomorrow morning and with the Federal Reserve adopting the “data-dependent” mantra, the economic figures should be relevant.

EUR

The AUDEUR managed to stay within a confined range and only trading slightly higher than yesterdays open, now sitting at 0.6165. European markets pared losses in late trade though still generally closed modestly lower with the Eurostoxx 50 underperforming as it ended the day down -0.2%, though the CAC was the outperformer with gains of +0.1%. European Consumer Confidence for March was the only piece of data from Europe and printed at -19.2, down from -19 and below expectations of -19.0.  ECB speaker Muller hit the wires saying the ECB should probably raise rates by a little, however, the lion’s share of hikes are behind them. Lots of data to digest from Europe this evening, with French, German, and Eurozone PMI’s are all due for release. Alongside the data, the Euro Summit is set to begin, in which all the Heads of state from the European Union countries are due to discuss the economic situation and policy at the ECB.

GBP

The AUDGBP has fallen to trade at 0.5431 after the Bank of England unsurprisingly raised the Official Bank Rate overnight. The BoE announced a 25 bps rate hike to 4.25% as expected. Analysts consider that with both growth and domestic inflation having surprised to the upside and given BoE’s message, they pencil in an additional 25 bps hike in May 2023. The policy statement highlighted an increase in Q2 Gross Domestic Product (GDP) forecast while also estimating a slower growth in Consumer Price Index (CPI) for the same. "UK banking system is well-placed to support the economy, including in a period of higher interest rates," added the BoE statement. It should be noted, however, that the policymakers clearly showed readiness for more rate hikes if inflation stays high. Moving forward, UK Retail Sales and UK Preliminary PMI’s will keep markets interested overnight tonight.

NZD

The AUDNZD plummeted to recently familiar territory at 1.0695 despite little action from the Kiwis. The NZD saw some continued strength after the Fed’s interest rate decision, and the recent speech by Reserve Bank of New Zealand´s Chief Economist Paul Conway. Conway didn’t offer fresh information, though media reports have framed his rhetoric to suggest the RBNZ still has a lot of work on their hands, a bullish outlook. Eerily quiet from NZ with nothing penciled in on the Macro-calendar ‘til Thursday next week.