Equity markets rebounded overnight, brushing off the Middle East military actions, although oil prices continued to surge. Oil jumped above US$91/barrel, increasing inflationary pressures, globally. The RBNZ reacted to the inflation threat, raising rates 25 basis points and promising a tightening bias. The early reaction was not welcomed by currency markets, with the KIWI retreating to 0.5850. Increased rates would normally bolster the currency short-term, but this action was received badly by markets. The Bank of Canada held steady, taking a more long-term, ‘steady-as-she-goes’ view. The Australian Dollar, in contrast pushed back up to 0.7170, supported by stronger than expected GDP numbers.
The reserve remained bid, holding the EUR below 1.1600, while the GBP drifted back under 1.3500. Economic data is being impacted by these extended pressures, coming from the energy markets and is beginning to tall in global data releases. Domestically markets will be looking at trade data from both NZ and Australia, set to be released today.
