APAC Morning Update - 22/02/21

Xe Corporate APAC

February 22, 20212 min read

American flag flying above the White House in the United States

The AUDUSD opens at 0.7874 and the NZDUSD opens at 0.7300

Some big moves late on Friday saw the Aussie up, or more specifically, saw the USD dropping off. As we know all the talk has been about stimulus. Will it be 1.9Trillion, maybe more, maybe less? Well lets not stress too hard about it, as Biden is apparently looking at ANOTHER 3 trillion infrastructure package after the first one is passed. The USD can always move 2 ways on good data. One is strength, the other is risk on, which generally has the opposite effect and funds flow into riskier commodity currencies which are perceived to perform better. If you look at the AUD especially, it is breaking into new 2 year highs, and why wouldn’t it? Copper and more importantly Iron ore are booming at around 10 year highs. A massive infrastructure spend will require a lot of raw materials, and some countries are just more exposed to that than others. It is easy to forget just how big a Trillion is. The Hoover Dam only cost about $1 Billion in today’s dollars so you could get 3,000 of those for your infrastructure project…

Back closer to home though, this week is also shaping up as a big one. Wednesday is the day where we have the RBNZ out with their OCR rate. RBNZ meetings are always interesting, though this one probably, on balance,  expected to keep things as they are. However, there could well be fireworks, with the legitimate outcomes ranging all the way from a bit 50 basis point cut down to negative rates, to a hawkish hold. I think a cut into negative territory would shock the markets, though that is something Orr is not scared of doing. He could also justifiably argue it should not be a surprise, as he has basically flagged it for the last year that that is indeed what he is planned all along. So definite risks either way.  

Global equity markets are off: Dow +0.0%, S&P 500 -0.2%, FTSE +0.1%, DAX +0.8%, CAC +0.8%, Nikkei -0.7%, Shanghai +0.6%.

Gold prices are up 0.5%, currently trading at $1,784 an ounce. WTI Crude Oil prices are off 2.4% trading at $59.2 a barrel

NZDUSD 0.7292 1.1%
NZDEUR 0.6020 0.9%
NZDGBP 0.5210 0.9%
NZDJPY 76.900 0.9%
NZDAUD 0.9271 -0.2%
NZDCAD 0.9195 0.4%
GBPNZD 1.9192 -0.9%

AUDUSD 0.7874 1.4%
AUDEUR 0.6499 1.2%
AUDGBP 0.5622 1.2%
AUDJPY 83.03 1.2%
AUDNZD 1.0795 0.3%
GBPAUD 1.7802 -1.1%