Markets Nervously Anticipate Developments in Ukraine
AUD
The AUD had a mixed performance in the last 24 hours, trading within relatively tight ranges across most major currency pairs as markets nervously anticipate developments in Ukraine. Asian Equities were down overnight with the Nikkei down a significant -2.2% while the Shanghai Comp was down -1%. The Australian share market clawed back some of its losses from Friday, with energy and miners supporting a strong performance. The ASX200 index advanced 0.4% to 7243.9 points. The fast-paced developments on the geopolitical tension on the Russia/Ukraine front remains confusing for investors to follow which may keep AUD movements capped for now. In Australia today we get the latest RBA Board Meeting Minutes. While Governor Lowe has spoken and the SoMP released since the Board meeting, the Minutes will be looked over for any discussion which points to the potential interest rate increases in the coming months.
USD
The AUDUSD was relatively subdued overnight with the pair trading among similar levels seen to Monday morning, trading at 0.7127 at the time of writing. US Equities were down with Wall Street selling off late in the session with the Dow Jones down -0.8%, the S&P 500 down -0.6% while the Nasdaq was down -0.2%. U.S 10 yields ticked higher to 1.99% and oil also remained well supported at around $94.9 a barrel. With no US Data of note overnight, risk related assets began to slide once again over the morning headlines, suggesting that Ukraine still wanted to join NATO and reports indicated an influx of Russian mercenaries into Ukraine in recent weeks. To the week ahead, trader should keep an eye on a busier economic calendar which includes Fed minutes, plus US PPI and US Retail Sales over the next 48 hours.
EUR
The AUDEUR pair pushed higher in the late session, trading as high as 0.6311 before coming back down to trade at a rate of 0.6303. European Equities opened lower to kick start the week. Stocks in Europe played catch up to the Friday losses on Russia-Ukraine jitters. The CAC dived -2.3% and the DAX finished closely behind down -2.0%. A lack of data overnight had attention paid toward ECB President Lagarde - saying the inflation would remain high in the near term but added that the ECB policy moves would be data dependent, any adjustment to policy would be gradual and that rates will not be hiked until asset purchases end. After a quiet Monday for economic releases, today’s data includes Eurozone GDP, Employment Data and the ZEW Economic Statement.
GBP
The AUDGBP pair had little momentum overnight and trades at similar levels to Monday, trading at a rate of 0.5265 this morning. The FTSE 100 tanked 1.7% on Monday to close at 7,532 points after reports suggest an invasion has gone from being a risk to highly likely. An absent UK economic docket has left AUDGBP trader adrift to geopolitical events and overnight Fed/ECB speak. Russia-Ukraine tensions weigh heavily on market players and risk appetite, as uncertainty in talks and mixed messages keeps the investors at bay, whilst others may turn to safe-haven assets. Little in the way of as we look forward with the Tuesday docket revealing employment data followed by Wednesdays CPI & PPI.
NZD
The AUDNZD pair bucked the trend and gained momentum to trade at 7-month highs, trading as high as 1.0781 before coming back down to trade at 1.0769. the AUDNZD pair remained of the bid tone throughout the overnight session, witnessing a third day of successive buying. In the event on Monday, NZ FPI (Food price index) rose 2.7% in January, this was the biggest monthly rise in five years and was the biggest annual increase since August 2011. In the absence of any market-moving economic release, traders cue for the upcoming RBA Board Meeting Minutes today, followed by US PPI figures this evening.