Aussie Dollar Rebounds on RBA Rate Hike
AUD
The Aussie Dollar pushes higher against the majors, fueled by The RBA’s rate hike and its revised inflation forecasts despite increasing global tensions. Asian equities rallied as well, with the ASX up 0.9% and the SHANGHAI COMP finishing up 1.3%. Commodities are volatile and mixed, with Oil up 2.3%, Nat Gas down 3.5%, Gold down 0.4%, Silver down 0.1%, Iron up 0.8% and Copper up 4%. The RBA hiked the cash rate 25bps as expected to 3.85%, with the accompanying statement taking a clear hawkish shift relative to the previous December meeting. In contrast to December, when the Board suggested that "some of the recent increase in underlying inflation was due to temporary factors", with risks to inflation "tilted to the upside", it now judges that "some of the increase in inflation reflects greater capacity pressures". The Board now judges that "inflation is likely to remain above target for some time." Today will see Chinese RatingDog Services PMI release, expected to remain at 52.
USD
The AUDUSD opens the morning higher, with the pair breaking back into the 0.70’s in the early afternoon, opening this morning at a rate of 0.7022. Wall St was bloody into the close, with the DOW JONES closing down -0.8%, S&P 500 down -1.4% and the NASDAQ down -2.1% fueled by further AI bubble fears. Economic news was quiet on the US front, with the US dodging a partial shut-down around an ICE funding bill. Tonight, ADP Non-Farm Employment Change is looking to see a slight uptick to 46k from 41k and ISM Services PMI is forecasted at 53.5 which is slightly down from last month.
EUR
The AUDEUR opens the morning higher, with the pair pushing into fresh 11-month highs, briefly piecing the 0.5950 barrier, opening this morning at a rate of 0.5941. European equities were quiet into the close, with the DAX down -0.1% and the CAC closing flat. Yesterday saw French Prelim CPI m/m come in lower at -0.3%, expected at -0.1% from 0.1%. Tonight, will have some CPI Flash Estimates, with the Core y/y expected to remain at 2.3% and the y/y figure expected to drop to 1.7% from 1.9%.
GBP
The AUDGBP opens the morning higher, with the pair pushing into the 0.51’s, reaching 14-month highs, opening this morning at 0.5123. British Equities were soft into the close, with FTSE finishing down 0.3%. Yesterday was quiet on the economic front, with tonight seeing their Final Services PMI to be released; with expectations of 54.2 from 54.3. Tomorrow the Bank of England is set to have their Official Bank Rate which is currently expected to hold.
NZD
The AUDNZD opens the morning higher, seeing the pair reclaim the 1.16 handle, opening this morning at a rate of 1.1614. This morning saw the release of NZ’s job’s data, with their Employment Change q/q coming in higher at 0.5%, expected at 0.3% from 0.0%; and their Unemployment Rate came in higher at 5.4%, expected to remain at 5.3%. This easing of labor market tightness and subdued wage pressure suggests less domestic inflationary risk, which provides the central bank with more room to lower or maintain steady interest rates to support the economy. There isn’t any further relevant data for the rest of the week and NZ will be observing Waitangi Day on Friday.