What happened
Financial markets expect the European Central Bank to deliver a 25 basis point rate hike at its next meeting, taking the deposit rate to 2.50%. In foreign exchange markets, the Australian dollar logged an outside up week, trading on both sides of its prior weekly range before settling higher.
Why it matters here
Persistent inflation in major overseas economies keeps global monetary settings tight. For local portfolios, ongoing interest rate increases by foreign central banks influence AUD/USD exchange rates and domestic debt pricing, impacting the AUD-denominated returns of offshore investments.
What to watch
Monitor the ECB rate decision announcement alongside incoming US inflation reports for key signals on global currency pairs and interest rate spreads.
Source
seekingalpha.com