AUD

• Oil jump. Another move higher in oil prices because of Middle East concerns dampened risk sentiment. Equities fell. USD firmer. AUD underperforms.• Macro worries. Higher energy prices pose an upside risk to inflation & downside risk to growth. More bouts of market & AUD volatility likely. Global Trends Market volatility related to developments in the Middle East and swings in the oil price continued overnight. This time sentiment soured once again with the US/Israel strikes on Iran showing little sign of easing after several days of conflict. Indeed, the conflict appears to be widening across the region with more...

• Market swings. Middle East conflict generated a burst of volatility overnight. Equities declined, oil prices rose. AUD traded in a ~2.5% range yesterday.• Macro news. AU Q4 GDP today. RBA Gov. Bullock noted the March meeting is “live”. China PMIs also due. US ISM services & ADP employment out tonight. Global Trends The broadening conflict in the Middle East and concerns that it could drag on longer than the “4 to 5 weeks” touted by President Trump rattled market nerves overnight. Risk sentiment soured as ‘stagflation’ worries took hold given the prospect of a simultaneous slowdown in growth and...

• Geopolitical nerves. US/Israel conflict with Iran has dampened risk sentiment in early Asian trade. USD firmer. NZD slips back. AUD underperforms.• Lingering risks. Market nervousness may persist for a while. Focus on oil. Risk of a jump up in prices. This could have macro impacts & be USD supportive. Global Trends The weekend geopolitical news looks set to dominate the market action, at least through the early part of the week. There is heightened uncertainty following the US/Israel missile attack on Iran, the confirmed death of Iran’s Supreme Leader Ayatollah Ali Khamenei, and Iran’s retaliatory strikes at neighbouring nations....

• AUD strength. Positive sentiment & firmer inflation have supported the AUD. This & JPY weakness have propelled AUD/JPY to a multi-decade high.• Data flow. US producer price inflation due later this week. Looking ahead, AU GDP, as well as the US ISMs, retail sales, & jobs report are out next week. Global Trends There was an upbeat tone overnight with limited fresh economic newsflow coming out over the past 24hrs. US and European equities rose. The US S&P500 (+0.8%) is within striking distance of record highs. A solid earnings update from tech heavyweight Nvidia after the US market close...

• US tariffs. US Supreme Court rules against Pres. Trump. US tariffs being rejigged. USD softer. AUD & NZD a little firmer. AUD still near multi-year peak.• Macro trends. Over medium-term reworking tariff policies may be US growth & USD supportive. This week AU inflation data due. RBA Gov. Bullock speaks. Global Trends US tariff developments were in focus on Friday and the weekend. The US Supreme Court struck down tariffs imposed by President Trump under the International Emergency Economic Powers Act (IEEPA). The 6-3 decision was somewhat anticipated given President Trump’s move to bypass Congress (which has control over...