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Market Musing, Asia Pacific

27 Feb 2024

Cross-Check: AUD/NZD – Bouncing back

After falling away sharply over the past few weeks AUD/NZD looks to be bouncing back to life. A key catalyst behind the drop in AUD/NZD to multi-quarter lows recently was the NZD supportive upward repricing in NZ interest rate expectations as markets factored in a chance the normally cavalier RBNZ re-starts its hiking cycle. In the end, at today’s meeting, the RBNZ clipped the markets ‘hawkish’ wings. The RBNZ’s Official Cash Rate was held steady at 5.5%, and the underlying tone and updated forecasts watered down the prospect of further tightening this cycle. The implied odds of another rate rise...

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13 Feb 2024

Any juice left in the USD’s upswing?

The USD has been on a tear over early 2024, with the USD Index undergoing a round trip. The USD pull-back that transpired at the end of last year has unwound just as quickly. Given the rest of the world is a ‘price taker’ and what happens with the USD is the key cog in the FX machine, this has seen currencies like the EUR (now ~$1.0710) and the AUD (now ~$0.6460) fall back, and others such as USD/JPY (now ~150.40) and USD/SGD (now ~1.35) rise, to levels last traded in mid-November. A string of positive US data surprises, the...

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18 Jan 2024

AUD volatility: a taste of things to come?

With 2023 firmly in the rear-view mirror and markets starting 2024 with a bout of central banker driven upheaval as enthusiastic interest rate cut expectations are pared back, we thought it is an opportune time to spell out our AUD thoughts. And refresh people’s minds about some of the AUD’s historic tendencies which we believe should be kept in mind when managing FX exposures, especially considering the tricky terrain markets and economies will be navigating over coming months. Regular readers of our research would be aware that after an anticipated bout of turbulence over Q3/early-Q4 2023 we were vocal regarding...

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14 Dec 2023

US Fed pivot has further to run

The US Fed’s ‘dovish’ turn at its mid-December meeting, where it effectively called time on the rate hiking phase and opened the door to easing down the track, has reverberated across markets. Global interest rate expectations have adjusted lower and bond yields tumbled, growth linked risk assets such as equities and commodities have risen, and the USD’s downturn took another leg lower. This mix has pushed the AUD (now ~$0.67) to the top of its multi-month range, a long way (nearly 7%) from its late-October lows. While the Fed’s pivot looks to have stunned many, it wasn’t a surprise to...

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05 Dec 2023

Australia’s growth pulse: down but not out

Australian GDP data is notoriously backward looking. We are now ~2/3’s of the way through Q4 and the print for Q3 was only released today. Nevertheless, the detailed national accounts are still useful in providing a guide to the underlying picture across a broad range of areas and helps us benchmark how trends are unfolding compared with our thoughts. The GDP report illustrates that momentum across the economy has stepped down, unsurprising given the 425bps worth of rate hikes put through by the RBA this cycle and other cost of living factors that are hitting the private sector. The economy...

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