2022 Kicks Off with USD Strength

AUD

An eventful last 24 hours for the Aussie Dollar with an increase in volatility as market participants get back to their desks, the AUD coming off worse for wear. In local equities, the ASX fell 2.7%, its worst session in 16 months, largely driven by tech stocks which fell 6.4%. Asian equities showed some improvement with the Hang Seng outperforming up 0.7%, rebounding from its lowest level since May 2020. Iron Ore closed flat with Copper closing down 1.2%. Minor data from China yesterday in the Caixin Services PMI which measures Chinese service sector health, showing an expansionary print of 53.1, outperforming expectations of a score of 51.9. Looking ahead there are no notable data releases coming out locally.

USD

Aussie sold off heavily after Wednesday night saw impressive ADP Non-Farm payroll numbers printing an increase in 807K jobs, double the forecasted amount, the pair trading at 0.7162 at the moment. Yesterday morning's FOMC minutes have seen a broad based, somewhat sustained pattern of USD buying as the market prices up to a 84% chance of a rate hike in March. To the data, and early yesterday morning US weekly jobless claims were weaker than expected with initial claims rising slightly to 207k to fall short of expectations of 195k while continuing claims rose to 1.754 mio from 1.718 mio, again falling short of expectations of 1.678 mio. The second round of US data saw December ISM Services fall to 62.0, down from 69.1 and below expectations of 67.0. November Factory Orders rose 1.6% to beat estimates of 1.5% though the ex-transport measure was +0.8% compared to expectations of +1.1%. Finally, and November Durable Goods Orders were revised up to 2.6% from 2.5%. Closing out yesterday, only the Dow on Wall Street was in the red with the Nasdaq closing up 0.5%. Looking ahead, tonight's all important Non Farm Employment data is due for release and if Wednesday's preliminary numbers are anything to go by, there's a chance of outperformance on the cards tonight.

EUR

AUDEUR sitting comfortably at 0.6340 this morning after coming off the boil on Wednesday. In European data, German construction PMI for December was 48.2 up from 47.9 in November. Eurozone PPI for November printed at 1.8% up from an expected 1.5% (5.4% previously). German CPI for December printed at +0.5% MoM and +5.3% YoY, higher than expectations of 0.4% and 5.1% respectively. European stocks reacted poorly to the releases with the DAX & CAC closing down 1.35% & 1.68% respectively. Looking ahead there is a slew of data coming out of Europe including Retail Sales figures and CPI data. Markets can also look forward to German Industrial production and Trade balance figures to accompany French monthly production figures and consumer spending data. 

GBP

Trading similarly to AUD EUR, AUDGBP is currently trading flat at 0.5291 this morning after losing groung throughout Wednesday. The overnight data from the UK was positive, Services PMI dropped to a 10-month low of 53.6 in December but still better than the 53.2 expected. The FTSE followed its European peers and was down 1.3%. Looking ahead to the data tonight, markets are expecting a contraction in Construction PMI to 53.9, from last month's 55.5. 

NZD

AUDNZD is trading flat this morning at 1.0611. With no data to move markets, the pair may trade quietly going into next week.