Today's Major Headlines
- Gold surges on ISM miss yesterday
- AUD bumps higher on shock 25 bps rate increase
AUD was the strongest currency across the board this morning after the RBA surprised the markets with a 25bps hike to help combat Australia's inflation worries.
We favoured AUDNZD longs after the RBNZ decision a few weeks ago, which has played out well.
Unfortunately, the week ahead is very thin on news, therefore no real data points to drive the market through a new structure or any shift in sentiment.
However, it is very possible for the escalation in tensions between Russia and Ukraine to light up the markets. As a matter of fact, a dam was blown up in Kherson yesterday, which caused major flooding around the surrounding areas.
On the geo-political front, things are not looking promising. There was an incident with Navy warships off the coast of Taiwan where China warships passed in a dangerous manner.
EZ consumer inflation expectations fell more than forecast. Market participants are now forecasting that the ECB won't be as aggressive as previously thought in its upcoming decision.
As you can see below, the economic calendar is very thin on news - not too packed for the start of the month.
Moving away from geo-political tensions, the other potential spark for market volatility could be the new issue of debt from the treasury this week.
This would cause significant swings in major asset classes across the board...
With JPY being hammered on rising US yields, there is scope for some short term in flows into the safe haven currency should we see increased tensions between Russia and Ukraine - a classic Risk Off move.
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