Australia

The RBA hiked the overnight cash rate by 25bp to 3.35% - its highest level since September 2012 – and warned of further increases in the months ahead.

Australia’s retail sales were down a lot more than expected in December, suggesting much of the hype had died over the Black Friday Sales and Cyber Sales Monday in November.

There’s no escaping the fact that Australian inflation continues to point the wrong way for the RBA and consumers alike. And today’s report should quickly eradicate hopes of an RBA pause in February.

A weak lead form Wall Street weighed on the Aussie overnight, with today’s employment miss adding to its downside pressure.

Whilst Australia’s final inflation print for the year remains high by historical standards, it was much lower than expected at 6.9% y/y

The RBA’s November minutes lean towards 25bp hike/s with a pause along the way, with a 50bp hike likely requiring higher inflation expectations and wages.

Business confidence came to a standstill according to a monthly NAB (National Australian Bank) survey, whilst consumer confidence is its lowest since the pandemic.

The RBA hiked their overnight cash rate by 25bp to 2.85% - its highest level since 2013. But inflation forecasts were also upgraded.

Australian inflation data is released tomorrow, and if it comes in hotter than expected – like it did on New Zealand – if adds another fly in the ointment for the RBA

Concerns that the US is headed for stagflation weighed on sentiment yesterday, which has placed AUD/JPY back onto our bearish watchlist.

Hopes that growth in Australia would rebound in Q1 were easily met, with GDP rising 3.4% q/q compared to 3.0% expected.

Whilst many were celebrating Australia day on Wednesday, investors were likely filled with trepidation given the ASX 200 was in free-fall leading into the public holiday.

Punchy retail data sent the Aussie higher across the board. Yet with US CPI expected to rise further tomorrow, the upside may be limited for AUD/USD.

December is upon us, a month that is usually associated with Santa’s rally. So we’ve decided to take a closer look at the data to see if it is true.

This time last year, ahead of the 2020 Melbourne Cup, speculation centered on what measures the RBA would take to bolster the economic recovery.

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In a continuation of yesterday’s quiet trading conditions in Asia, a muted session overnight with risky assets moving higher on low volumes ahead of a busy second half of the week including earnings reports from major US tech stocks, Google, Apple, and Facebook and central bank meetings.