As fighting intensified in Ukraine, the market volatility index recorded its highest close since January 28th. Oil soared through the $100 mark, jumping 8.7% to $104 a barrel. There was a broad based rally for commodities and safe havens with gold and USD gaining whilst stock markets fell. The worst performing major currency was EUR with the Euro area most prone to escalation.
The RBA pointed to the UKraine as “a major new source of uncertainty” in the context of inflation in its monthly rate statement. The market is pricing a rate hike in August rather than July now. They remain upbeat on the economy but note that “wages growth remains modest” and is “uncertain about how persistent the pick-up in inflation will be given recent developments in energy markets”.
Economic data was solid. Manufacturing PMI numbers in China, America and Australia all beat analysts’ expectations. Chinese business conditions unexpectedly improved in spite of widespread Covid restrictions. Price pressures increased but remain lower than what is being experienced in the US and Europe. And Canadian GDP did not grow last quarter – the BOC is likely to hike tonight.
TODAY’S AGENDA: Australian GDP figures for the October-December quarter are released at 11:30am AEDT. The time period is very back dated but there will be scrutiny on the consumer numbers at the time of the October NSW and VIC reopening and the Omicron slowdown in December-January. Federal Reserve Chair Jerome Powell will be speaking at 2am.
| CURRENCY | MID-RATES | %CHANGE |
|---|---|---|
| AUD/USD | 0.7252 | -0.12% |
| AUD/EUR | 0.6519 | +0.71% |
| AUD/GBP | 0.5442 | +0.59% |
| AUD/JPY | 83.32 | -0.14% |
| AUD/NZD | 1.0731 | -0.06% |
| AUD/CNH | 4.5818 | -0.04% |