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GBP

04 Jul 2023

RBA holds fire

• US holiday. Quiet night across markets. Oil prices rose, EUR weakened, & the AUD bounced back following yesterday’s post-RBA meeting dip.• RBA holds firm. Cash rate held steady at 4.1%. We expect a 25bp hike in August when new inflation & labour market forecasts are produced.• US data flow. US FOMC minutes, JOLTs job openings, ISM services measure, & US labour market report due over coming days. With the US enjoying its 4 July holiday it was another quiet night across markets. The EuroStoxx50 eased (-0.2%), with cyclical sectors like industrials, materials, and financials underperforming. European bond yields were...

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04 Jul 2023

RBA: Skips a beat

In what we believe was yet another finely balanced call the RBA held the cash rate steady at 4.1% at today’s meeting. This maintains the cumulative tightening delivered so far this cycle at 400bps. This is the sharpest RBA tightening cycle since at least the early 1980s, and we don’t think the RBA is done. The RBA once again noted that while inflation has passed its peak it “is still too high” and “will remain so for some time yet”. However, considering the sharp increase in rates that has already been put through and uncertainty around the outlook, a decision...

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29 Jun 2023

Even higher for even longer

• Rates re-pricing. Positive US GDP & jobless claims data has seen interest rate expectations adjust higher. US bond yields have moved up.• USD firm. The repricing has supported the USD, although yesterday’s better than expected AU retail sales data has helped the AUD hold its ground.• AUD events. Ahead of next week’s ‘line-ball’ RBA rate decision, the China PMIs, Eurozone CPI, and US PCE deflator are due today. Bond markets came alive overnight, with yields spiking on the back of stronger than anticipated data. In the US, the run of positive surprises continued. Q1 US GDP growth was revised...

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28 Jun 2023

AUD tumbles

• Central bankers. Fed Chair Powell, ECB President Lagarde & BoE Governor Bailey maintained a ‘hawkish’ message. The BoJ remains an outlier.• AUD slides. AUD has continued to fall (now 4.3% below its mid-June highs). A firmer USD compounded the slowdown in Australian headline inflation.• AU events. Retail sales & job vacancies due today. A soft retail sales print is likely to add to the AUD’s woes. RBA meets next week. Central bank speak was in focus overnight with Fed Chair Powell, ECB President Lagarde, BoE Governor Bailey, and BoJ Governor Ueda appearing on a panel. On net, a ‘hawkish’...

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28 Jun 2023

CPI adds to the AUD’s woes

The AUD continues to fall back down to earth with the larger than expected slowdown in Australia’s monthly CPI indicator the latest piece of news that has exerted pressure on the currency. At ~$0.6640 the AUD is ~3.7% below its mid-June highs. The pull-back has been inline with our thinking, given we believed that the AUD had run too far too fast earlier this month (see Market Musings: AUD: break-out or bull-trap?) Data wise, the monthly headline inflation measure slowed sharply, from 6.8%pa to 5.6%pa in May (market forecast 6.1%pa). This is the slowest annual run rate in headline inflation...

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