Spreadex Market Update
Aussie Soars as RBA Announces Surprise Rate Hike
A quiet start to the week for markets yesterday with European traders offline for the Early May Bank Holiday. The calm before the storm, perhaps, with the Fed and the ECB both set to hike rates further this week. The main story this morning was the surprise rate hike from the RBA overnight. The Aussie was seen surging higher by around 1.5% against the Dollar as the bank unexpectedly hiked rates .25% from the prior 3.6% level. While RBA governor Lowe noted that inflation had likely passed its peak, at 7% the bank judged that it was still too high and in the interests of returning CPI to target took the decision to lift rates. Markets are now looking nervously ahead to the FOMC tomorrow and ECB to follow on Thursday.
Key Factors for Today
- Markets buoyant as European traders return after bank holiday
- EUR rallying hard – AUD lifted on RBA rate hike
- US earnings back in focus
Market Movers
- EURJPY hits 15-year highs
- AUDUSD rallies 1.5%
- DAX hits fresh 2023 highs
Econ Calendar
- Eurozone flash CPI (10am)
- RBA’s Lowe Speaks (12.20pm)
- US JOLTS Job Opening (3pm)
Earnings
- Pfizer
- HSBC
- Starbucks
Stocks Buoyant Following FRC Bailout
US earnings season is back in focus today with Pfizer, Starbucks and HSBC among the big names due to report. Over the weekend, news that JP Morgan will buy troubled lender First Republic, avoiding the collapse of the bank, has once again helped underpin investor confidence. With the private sector stepping in to help protect against a wider banking crisis developing, stocks have been firmly higher at the start of the week. The Dax has broken out to fresh YTD highs this week while the S&P is testing the current highs, threatening to break
higher.
In FX, there have been plenty of big moves at the start of the week. EURJPY has hit 15-year highs as EUR surges higher ahead of the ECB later in the week and JPY softens against a better risk appetite. Today the focus will be on the flash eurozone CPI number for April. With inflation forecast to have remained sticky at high levels last month, the data should reinforce hawkish expectations ahead of Thursday’s meeting.
On the data front, a slew of PMI readings out of the eurozone will also be on watch today as will the latest US JOLTS. We also have RBA governor Lowe speaking with Kiwi employment data to follow later this evening.
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