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RBA surprise again with another 25bps rate rise

Good morning

RBA surprised the markets overnight with another 25bps rate rise to take rates to 4.1%, when no change had been widely expected. AUD did push higher with AUDUSD trading up from 0.6620 to 0.6680 and GBPAUD from 1.8800 down to a low around 1.8600 before correcting a little to 1.8650. RBA have said that further tightening may still be required to bring down inflation, which they see as having new upside risks.

UK BRC retail sales numbers overnight were down on the previous reading, the suggestion is that ever-increasing food prices are having an impact on non-essential items. Interesting as you have to say higher mortgage rates and higher energy bills are probably having a greater impact on spending. I did however notice a bottle of Tesco own brand ketchup in the fridge, my wife says Heinz ketchup price increase has gone too far.

GBPUSD did trade down to 1.2370 yesterday afternoon while EURUSD hit 1.0675 but they have both recovered to 1.2430 and 1.0710 respectively, the softer US dollar came in part from weaker US services ISM numbers yesterday afternoon. GBPEUR pretty much unchanged at 1.1605. USDJPY has slipped back below 140.00, now 139.25

Lagarde comments drew little attention, she said price pressures remain high and that there was no evidence inflation had peaked, however she did add that the impact of tighter monetary policy was starting to be seen.

US have warned that there is a real risk of someone getting hurt by aggressive moves from China’s military. In recent weeks we have seen footage of Chinese jets and warships flying or sailing perilously close to US jets and ships, causing them to change course in most instances. China remain undeterred and are eager to flex their muscles in the South China Seas. We’ll have China trade balance overnight, expect another surplus approaching $100bn.

In Ukraine, Russia have been accused of blowing up a major dam in an area they currently control amid talk of a major Ukrainian counter-offensive. I do recall concerns late last year that Russia were looking to destroy a dam that would have acted as something of an atomic bomb of water, causing catastrophic flood damage, according to Zelensky.

Apple stocks traded to a new high ahead of the unveiling of their latest hardware, an augmented reality headset, Apple Vision Pro. The share price did fall after the announcement from a high around $185 to close $179.58. I’ve obviously not tried this headset, I have no doubt it is pretty clever but whether it has any uses I’d ever want remains to be seen, and at $3,499 it isn’t really going to be a common piece of equipment to start with.

Wearable tech hasn’t really ever caught on, I remember Google glasses quietly fell by the wayside. Mind you, people probably said the same about cars and the internet and the iphone when they were released. Apple does seem to have an ability to eventually turn things we don’t want or need into vital pieces of our daily lives. Still can’t see people wearing these goggles but hey, maybe in a few years I’ll be sitting at my desk in a pair with a whole new way of computing and communicating.

- 10.00 EU retail sales

- 15.00 CAD Ivey PMI

- 00.20 RBAs Lowe speaks

- 00.50 RBAs Bullock speaks

- 02.30 AUS GDP

- 04.00 China trade balance

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