Talks between Ukraine and Russia did not yield material results as Russia continued its advance whilst also suffering losses. The Rouble dropped as much as 30% whilst the central bank raised interest rates from 9.5% to 20% and barred capital from leaving the country. Companies continued to divest from Russia with Shell the latest to dispose of oil assets.
Volatility remained elevated but has not spiked to the extent of other risk events that we have seen in the past twenty-three months. AUD recorded its first 100 point daily gain since November 2020 and highest close for seven weeks. Oil and iron ore prices continued their advance which will be beneficial to our export values. Geopolitical risk is lower here due to geographical distance.
Australian economic data was largely strong. Retail sales rose strongly following two soft months as a result of omicron. Corporate profits and sales volumes also increased. Inflation expectations rose to the equal highest level in eighteen months. On the flipside, housing prices have fallen for the first time in seventeen months and weekly credit card spending has eased off again.
TODAY’S AGENDA: The RBA will hand down its interest rate statement at 2:30pm AEDT. It is likely that they will hint at a sooner interest rate hike but will also cite below trend wages growth (i.e. sit on the fence). Manufacturing activity data will be handed down, most notably from China and America. The Ukraine crisis will continue to shape the narrative and keep volatility elevated.
| CURRENCY | MID-RATES | %CHANGE |
|---|---|---|
| AUD/USD | 0.7260 | +1.04% |
| AUD/EUR | 0.6472 | +0.45% |
| AUD/GBP | 0.5410 | +0.39% |
| AUD/JPY | 83.44 | +0.34% |
| AUD/NZD | 1.0725 | +0.09% |
| AUD/CNH | 4.5842 | +0.88% |