Global markets accelerate after PPI
The Australian and New Zealand dollars jumped back to recent highs overnight after a sharp drop in US producer prices boosted global sentiment.
US producer prices fell by 0.5% in March – well below the flat result expected – and caused markets to speculate there is less need for the US Federal Reserve to raise interest rates at its next meeting.
US equities were stronger with the S&P 500 up 1.3% and the Nasdaq up 2.0%. Both indexes neared eight-month highs.
The optimism in global markets was seen by a fall in the CBOE’s Volatility Index (VIX) – sometimes called the “fear index”. The VIX fell to the lowest closing level since January 2022 overnight.
Aussie boosted by strong jobs number
The Australian dollar surged higher as global equity markets improved.
The AUD/USD gained 1.4% as it moved back to topside resistance at six-week highs just under 0.6800.
The Aussie was stronger in all markets, notably rebounding versus the European currencies. The AUD/EUR gained 0.9% while the AUD/GBP gained 1.0%.
The AUD was helped by another strong jobs number with 53k jobs created in March and the unemployment rate falling from 3.6% to 3.5%.
The kiwi was also stronger with the NZD/USD up 1.2% and back near recent resistance at 0.6300.
Chinese GDP in focus next week
US data remains in focus with retail sales and consumer confidence due tonight.
Next week, Chinese GDP will be the major release. Hopes for a swift reopening across China after last year’s Covid lockdowns boosted markets in December and January but more recent data has been mixed.
One measure to gauge the health of the Chinese economy is fixed asset investment. As per below, the recent improvement this series has been entirely driven by government activity – the private sector remains moribund. Other measures of private activity, such as retail sales, have also disappointed.
Next week, with March-quarter GDP due on Tuesday, the composition of Chinese growth will be closely watched.
Aussie, kiwi surge after PPI
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 10 – 15 April
All times AEST
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