As fighting intensified in Ukraine, financial markets continued to bid up energy and agricultural commodity prices. Oil tacked on another 5.5% and natural gas, which Australia is the third largest exporter of, hit a record high. Wheat jumped to a fourteen year high. AUSUSD topped the 0.7300 mark and recorded its highest close since November 16th. Volatility remained very elevated.
Australian GDP growth in the final quarter of 2021 was 3.4%, in line with expectations, as VIC and NSW recovered from delta. Consumption soared as households spent on retail and services whilst there is still a historically high amount of savings, $250bn in all, that will underpin future demand. The economy is predicted to grow by 4.6% in 2022 although inflation is at a fourteen year high.
Federal Reserve chair Jerome Powell said that the US central bank will “proceed carefully” with interest rate hikes. He added that he is “inclined to propose” a 0.25% interest rate rise at the meeting in two weeks rather than the 0.50% hike that some in the market were tipping. Meanwhile Canada became the latest country to tighten monetary policy – the BOC raised rates from 0.25% to 0.5%.
TODAY’S AGENDA: Services sector PMI data from the major economies is released throughout the day. It is expected that activity and future orders have both risen rapidly since the omicron wave peaked. Also, ahead of the key monthly US employment report tomorrow night, the weekly jobless claims number is released by the US Department of Labor.
| CURRENCY | MID-RATES | %CHANGE |
|---|---|---|
| AUD/USD | 0.7293 | +0.57% |
| AUD/EUR | 0.6558 | +0.60% |
| AUD/GBP | 0.5440 | -0.04% |
| AUD/JPY | 83.24 | -0.10% |
| AUD/NZD | 1.0744 | +0.12% |
| AUD/CNH | 4.6113 | +0.65% |