Fresh US Producer Inflation Numbers Due Tonight

AUD
The Aussie is down against all majors with the exception of the Pound Sterling, with risk off sentiment continuing to rule the markets. Looking at the Asian equities overnight, the ASX is -0.3%, Nikkei index is down -2.6%, and the Shanghai comp was up 0.2%. Commodities also abandoned the AUD with Gold down -0.9%, Silver down -2%, Iron down -0.5%, and Copper down -0.3%. NAB businesses confidence index came in at 5 versus the prior months 10, above 0 indicating improving conditions. The Westpac consumer sentiment was released as -0.9% versus last month’s 3.9%. The IMF updated their global forecasts and raised their global inflation outlook for 2022 and 2023 while lowering their GDP forecasts for 2023, stating that “the worst is yet to come”. A bit of Chinese data out overnight with M2 money supply y/y coming in on expectation at 12.1% and New Loans being way above the expectation of 1810B at 2470B. No major reactions from markets though. Fairly quiet for the rest of the week in the Aussie economic calendar apart from RBA’s assistant governor Ellis speaking at an investment conference later this week. AUD will continue to be at the mercy of global recession -related risk sentiment and the rampant USD.

USD

The wrecking ball USD continues its strength across the board, the AUDUSD pair opened down at 0.6273 this morning. The Aussie reached new 2 1/2 year lows of 0.6247 against the Greenback yesterday afternoon, until rebounding back up to 0.6346 in the overnight session, before falling again to its current level. Prior to Covid, the last time this pair was at this level was back in 2009. US equities still showing red across the overnight session with NASDAQ closing at -1.1%, the S&P 500 -0.7% while the Dow Jones finished +0.1%. The IBD/TIPP economic optimism index came in above the expected 40.5, being reported as 41.6. Whilst anything below 50 indicates economic pessimism, this sentiment index is steadily improving from earlier in the year. Big data with market moving potential out later this week from the US later tonight with PPI m/m & Core PPI m/m (with 0.2% & 0.3% priced in respectively) is being announced. FOMC meeting minutes will likely garner some attention as markets look for clues to adjust expectations. Then CPI m/m and CPI y/y the following night on Thursday. Yearly CPI for the US is currently expected at 8.1%. Potential for continued volatility over the next few nights. 
 

EUR

The Aussie opened about 30bps down against the EUR from yesterday with the pair currently sitting at 0.6457.Overnight we bounced back from yesterday's decline down to 0.6443, reaching a high of 0.6493, before coming off again. Yesterday Italian Industrial Production m/m landed way above expectation at a 2.3% increase against the flat expectation. The ECB’s chief economist Philip Lane also on the wires saying that the ECB would ensure that inflation returns to the 2% target and that they must assess the various factors driving inflation though noted no broad de-anchoring of mid-term price expectations. In geo-political news, the G7 said that they would stand with Ukraine for “as long as it takes” and would continue to impose further economic costs on Russia. Comments from the Russian Foreign Ministry meanwhile hinted that Russia was waiting for a formal invite to hold peace talks in Turkey. Later in the session, Ukrainian PM Zelenskiy said that there could be no dialogue with Putin but there could be with another head of state. A busy rest of the week for the Eurozone in terms of data, Eurozone industrial production m/m and the German 10 year bond auction tomorrow; German Final CPI m/m (tipped at 1.9%) and ECB president Lagarde speaking in Washington DC on Thursday; French Final CPI m/m (expectation at -0.5%) and Eurozone trade balance (expectation -45B) on Friday.

GBP

The AUD was up against the pound in the overnight sessions with the BOE announcing an imminent end to its temporary intervention in bond markets. The Aussie Jumped 50 pips against the GBP between 5:30am and 7:15am this morning. We are currently sitting at 0.5709. A very busy day yesterday in terms of data for the UK. The Unemployment Rate came in 0.1% better than expected at 3.5%. A huge shock for Claimant Count Change m/m which came in at 25.5k new claimants versus the expected 4.2k increase. Average Earnings Index 3m/y was up 6%. British equities following global trends with the FTSE was down -1.1%. A slew of data out for the rest of the week for the UK. The most important being the GDP m/m announcement tonight which is predicted to print at 0.0% growth for the month of August. Also tonight, Construction output m/m (tipped at 0.5%), Industrial Production m/m, Manufacturing Production m/m and Goods Trade Balance (tipped at -20.3B).

NZD

The AUD is down against the Kiwi, falling about 85bps in the overnight session settling at a 1.1227 this morning. NZ printed its month on month Visitor Arrivals this morning, coming in at -3.3% after last months huge 41.8% increase. Tomorrow the Food Price Index (FPI) for September is out, currently tipped 1.1% continuing the trend of steady increase over the past year. On Friday BusinessNZ Manufacturing Index m/m. Kiwi Dollar regaining some recent losses as the diverging interest rate markets favouring the higher-yielding NZD.