Central Banks to Meet This Week Amid Inflation Fears

AUD

The Australian Dollar succumbs to risk retreat opening lower against the major’s to start the week, despite worries about inflation causing markets to sharply increase the odds of the RBA hiking the cash rate a quarter point to 4.10% at its March meeting tomorrow afternoon. Asian equites ended lower on Friday with the Nikkei -1.2%, Hang Seng -1% and the Shenzhen -0.4%. Locally the ASX 200 traded -0.1% as the materials sector underperformed at -2.1%. Nothing set for release locally as all eyes will be set on the RBA Cash Rate decision tomorrow with forecasts pointing to a 25-basis point jump from 3.85% to 4.10%. On Thursday, we have Aussie Unemployment Rate and Employment Change set to release. Across to Asia, China will release major activity indicators for the Jan–Feb period today. On the consumption side, consensus now expects retail sales to rise 2.1% Y/Y in Jan–Feb, compared with 0.9% in December.

USD

The AUDUSD coupling took a hit over the weekend starting the week at 0.6997 as the Greenback strengthened across the board on Friday, set for a second straight weekly gain, as the war in the Middle East drove investors further toward safe-haven assets. Over the weekend, there was a large batch of economic data to digest as the US saw their JOLTS Job Openings increase from 6.55M to 6.95M beating forecasts and Core PCE Price Index m/m rose 0.4%, in line with forecasts. The US GDP growth for the fourth quarter came in lower at 0.7% YoY from the initial estimate and market expectations of 1.4%. Wall St. slipped in late trade with the Dow Jones -0.3% at the closing bell with the S&P 500 -0.6% and the Nasdaq -0.9%. Nothing too major set for release out of the US today with only a few minor releases and the Empire State Manufacturing Index set to drop from 7.1 to 4.0. All eyes will turn to Thursday as the US Federal Reserve will have their rate decision, currently expected to hold.

EUR

AUDEUR opens lower to start the week at 0.6119 after risk sentiment soured globally with ongoing middle eastern tensions. Industrial Production m/m on Friday came through much lower than forecast at -1.5% from the forecast 0.6%. Eurozone equities closed mixed with the DAX -0.6%, and the CAC +0.9%. Nothing set for release out of the Eurozone today with all eyes focused on the Main Refinancing Rate this Friday with current forecasts pointing to a hold, keeping the refinancing rate at 2.15%, but a hawkish tone can be expected due to inflationary energy prices.
 

GBP

AUDGBP opens lower this morning at 0.5285 despite some poorer than forecasted GDP m/m data. UK equities also closed in the red with the FTSE -0.4%. Nothing major out of the UK today with only Rightmove HPI m/m set for release later this morning. The next news major event for the UK will be on Thursday with the UK Official Bank Rate with forecasts of a hold at 3.75%. Recently investors have swung from pricing 50bp of easing in 2026 on the eve of the Iran conflict, to 20bp of rate hikes now, so commentary made after could be a crucial indicator for future monetary policy decisions.

NZD

AUDNZD trades sideways over the weekend opening at 1.2093. BusinessNZ Services Index was released earlier this morning printing lower than previous at 48.0 from 50.7. It will be quite a busy week for our Kiwi neighbours with GDP q/q on Thursday which is currently forecasted for a significant decrease from 1.1% to 0.4%.