Market Headlines
A relatively quiet night on Wall Street with the NASDAQ trading +1.3%, while the S&P 500 was +.7%. US yields were flattish while crude oil fell 9% to $103.30 a barrel. AUD/USD traded from its high of 0.7540 to a low of 0.74665 before recovering to the 0.7495 region. The ASX closed 0.1% higher, with mining stocks leading the gains.
AUD/USD had a choppy session, closing at highs of 0.7540. USD/JPY was the focus, as it rallied following BOJ coming in to buy unlimited Japanese Government Bonds, trading to a high of 125.105. US yields on two-year Treasuries surged 14bp to 2.41%, while 10-year yields advanced 2bp to 2.49%. WTI crude fell 4.1% to $109.22 a barrel, amid demand concerns in China, following the lockdown of Shanghai.
Eurozone money markets are now pricing in 60bps of ECB rate hikes by year-end, up from last week’s 50bps. Japan’s Sakakibara commented that the current weak Yen is positive for Japan’s economy and that further weakening beyond 130 would cause problems. He added that BOJ rate hikes should be among the options to correct weak Yen beyond 130. US Wholesale Inventories for February rose 2.1% to beat expectations of a 1.2% gain. The Dallas Fed Manufacturing Activity Index for March printed at 8.7 to fall short of expectations of 11.0. No reaction to the data with risk generally softer over the NY morning as US futures moved into negative territory and yields reversed earlier gains.
Currencies
Following the open, AUD/USD retreated below 0.7510, NZD/USD edged lower to 0.6927. EUR/USD remained near daily highs of 1.0999 and GBP/USD was range bound around daily lows of 1.31275. USD/JPY fell back beneath 124.00 and USD/CAD bounced sharply off lows of 1.24735. BOE’s Bailey said the UK is facing a very large shock to income, and there is no policy tool to alleviate said shock. He added that he is seeing evidence of growth and demand slowing and that in this current circumstance tightening is appropriate. AUD/USD slipped below 0.7500 and moved to lows under 0.74665 while NZD/USD fell under 0.6890, EUR/USD fell to 1.0945 and GBP/USD made lows of 1.3055. USD/CAD up to 1.2593 in the move having been below 1.2500.
Currency ranges over the last 24 hours
Market Outlook
The market expects another relatively quiet day ahead with Australia’s retail sales for February the key event. Macquarie Strategy expect the numbers to have risen by around 0.5% m/m after surprisingly strong growth of +1.8% m/m in January. The market also expects that Quarterly ABS job vacancies may show a solid rise over the three months to February, with ANZ job ads increasing 1.8% over that period. Some weakness in the AUD/USD overnight saw it trade to a low of 0.74665 before recovering to the 0.7500 region. The market expects offering interest ahead of 0.7550 while demand should materialise ahead of 0.74c
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