Oversized Hike Takes UK Interest Rates to 5.0%
AUD
Diminishing risk appetite leads the Aussie to slide overnight, opening considerably down against the majors. Weaker Commodities also contributed to the downward slide with Silver down 1%, Iron Ore down -0.4% and Copper down 0.4%. Asian equities performed similarly, with the Nikkei trading down 0.9%, KOSPI gaining 0.4% while Hong Kong and China had holidays. The ASX finished the day down 1.6%, with the lowlight being the Information Technology sector which fell 4.0% with no sector seeing green. Looking at today we have already had the Flash Manufacturing PMI and Flash Services PMI release, with both underperforming and both at 3-month lows, with manufacturing coming in at 50.7, and services coming in at 48.6. No other news to look out for this weekend.
USD
The Aussie fell 0.58% overnight against the Greenback, opening this morning at 0.6759 due to lowering risk appetites and strong Unemployment, and Existing Home Sales data out the U.S. The U.S. dollar has advanced not just against the Aussie but a bucket of currencies as Fed Chair Jerome Powell backed more U.S. rate increases albeit at a “careful pace”. Despite JPowell's bullish tone on interest rates, U.S. equities rebounded overnight with the Nasdaq closing +0.9%, Dow Jones flat at 0.0%, and the S&P 500 +0.4%. Tonight we have the U.S. Flash Manufacturing PMI, Flash Services PMI set to be released, and on Sunday with have FOMC Member Williams speaking.
EUR
The AUDEUR opens lower this morning at 0.6171 in what was a generally tough night for the AUD. European Consumer Confidence data overnight showed continued pessimism in the face of likely additional rate hikes from the ECB. European equities performed sourly with the CAC down 0.8%, and DAX down 0.2%. We have a myriad of data releases out the Eurozone later in the afternoon with the ECB President Lagarde speaking, Eurozone, French, German Manufacturing and Services PMIs, and the Belgian NBB Business Climate.
GBP
The Aussie opened up lower against the pound this morning at 0.5302, after the Bank of England voted 7-2 in favour of raising interest rates by 50bps to 5.0% which was twice market expectations. The BoE’s Bailey made remarks after the Bank’s rate decision, saying he’s not trying to trigger a UK recession and will do what it takes to cut inflation. Bailey said he’s not signalling the next rate move but wage and price increases must slow in the UK. To the equities the FTSE had a soft day yesterday, seeing a decline of 0.8%. We have data to look out for today, with the GfK Consumer Confidence already being released performing better than expected coming in at -24, and later in the afternoon we have Retail Sales m/m, and GBP Flash Manufacturing PMI, and Flash Services PMI.
NZD
The AUDNZD opens lower after an early rally this morning before re-adjusting at 1.0938, not too big of a change as data out of New Zealand showed the trade deficit widening. No news set to be released today.