Written by Steven Dooley and Shier Lee Lim
US shares, BTC reverse from all-time highs
A sharp reversal rippled through markets overnight but, as has been the case for the last few months, FX markets were largely unmoved.
US sharemarkets saw declines after reaching all-time highs last week. The Dow Jones index fell 1.0% overnight while the Nasdaq dropped 1.8%.
Bond yields also fell with the benchmark US ten-year bond yield falling from 4.22% to 4.14%.
Most notably, sharp reversals were seen in the cryptocurrency space, with bitcoin falling as much as 14% after touching new all-time highs overnight, before later recovering to end 5.4% down.
While other global markets were roiled, FX was becalmed – as per recent history.
The EUR/USD was flat while GBP/USD gained 0.1%.
The AUD/USD and NZD/USD both fell 0.1%.
In Asia, the USD/JPY lost 0.3%, USD/SGD fell 0.1% and USD/CNH was flat.
Australian GDP to slow, but still supportive for AUD
Today’s early focus is on Australian December-quarter GDP.
Our estimate of GDP growth increased little from 0.2% in Q3 (1.5% y-o-y from 2.1%), rising by 0.3% q-o-q sequentially in Q4. We believe that in Q4, both consumer expenditures and overall private demand were essentially unchanged.
Net exports appear to have contributed little but positively to GDP, even if they represent a fall in import quantities, which should be reflected in reduced inventories. Government expenditure probably increased. Separate figures show a decline in hours worked in Q4, and increase was probably spurred by the persistence of high net immigration. But this implies that real GDP per capita most certainly decreased once more in Q4.
Australian GDP is due at 11.30am AEDT. With a mid-year goal of 0.69 for the AUD/USD pair, we continue to be mildly positive.
Korean CPI due
After decreasing demand-side inflation in January, supply-side price rises are expected to push Korean headline CPI inflation up to 3% y-o-y in February.
Monthly increases in retail gasoline prices were accompanied by a corresponding rise in the price of agricultural products due to seasonal demand. Nonetheless, we anticipate that core inflation would decline to 2.3% y-o-y in February from 2.5% in January due to a slowdown in domestic spending, which is probably a factor influencing the cost of durable goods and services.
We remain positive on KRW. Why? (a) Ongoing recovery in the electronic exports; and (b) ongoing equity inflows especially since foreign ownership remains low.
Euro strength seen as EUR/USD nears one-month highs
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 4 – 9 March
All times AEDT
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
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