6th April 2022 - AUD Bulls take over



Market Wrap

AUD outperformed after the RBA implemented a hawkish hold after it dropped the word patient from the statement in regards to rate hikes, seeing AUD rise to a high of 0.7661, the highest since June 2021.

NZD was also firmer, only marginally as the Dollar gains wiped out any initial gains in NZD/USD which saw a high of 0.7034 as it tracked Aussie higher throughout the morning.

DXY hit its highest level since May 2020 at 99.494 which was supported by a move higher in yields after Fed's Brainard spoke of a "significantly larger balance sheet reduction than 2017-2019 at a "rapid pace", with a phase in period to be "much shorter" than the prior normalisation cycle, which for a dove sounded quite aggressive. which was coupled with concerns on high inflation ahead of the FOMC Minutes on Wednesday, where we will be watching for clues on the balance sheet decision.

The US ISM services data was mixed, rising to 58.3 from 56.5, but a touch short of the 58.4 expectation. Prices

paid continued to rise while employment saw a welcome jump back into expansionary territory. New orders also rose, while business activity only saw a slight increase.

Euro slipped amid the Dollar strength, seeing a low of 1.0904 after falling through 1.0950 in wake of the Brainard

comments.

JPY was weaker following the move in the Dollar while the leg higher in yields only added to the Yen's woes after

jawboning from the BoJ.

CNH was only modestly weaker against the buck, reversing most of the losses seen in the offshore Yuan

overnight.


Geopolitical

Ukraine/Russia rhetoric continues to worsen, with the seeming likelihood of some sort of agreement diminishing amid the suggested war crimes in Bucha.

Regarding talks, Russia's Kremlin stated they do not reject the possibility of a meeting between president's Putin and Zelenskiy but it is only possible once a document has been agreed, whilst Ukraine President said the possibility of holding discussions with Russia is 'very challenging', but he has no other option.

Elsewhere, and on sanctions, the US and G7 are to announce sweeping new Russia related sanctions on Wednesday, whilst a large EU sanctions package against Russia is coming, with the first tranche touching on energy (EU coal ban from Russia), if it is approved.

Moreover, Russia's Foreign Minister Lavrov noted the West is trying to derail talks between Russia and Ukraine by fueling hysteria over Bucha, according to Rio. Finally, US, Australia and UK earlier announced they are to co- operate on hypersonic weapons, in which the FT said it was as part of a response to China's swift military expansion.

Commodities

Oil prices were lower Tuesday after reversing earlier strength in a generally choppy session amid China's lockdown extension and more sanctions against Russia. Biden admin officials are looking at ways to boost oil imports from Canada, but not via the Keystone XL pipeline, according to WSJ citing sources.

Currency ranges over the last 24 hours

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