NZ Q3 CPI Remains Steadily High at 2.2%
AUD
The Aussie Dollar allowed a breather overnight as risk sentiment had a rebound, opening flat against most major currency pairs and up against USD. Asian equities closed yesterday mixed with the ASX -1.4%, SHANGHAI COMP +0.4%, NIKKEI -0.4%. Commodities were down for the most part with Crude Oil -0.1%, Ice Nat Gas -11.1%, Gold and Silver down 0.6% and 0.7% respectively. Iron Ore the only commodity in the green opening up 0.6%. A quiet day for local data yesterday, however we will see a pick up today with the release of the Monetary Policy Meeting Minutes, which will be pored over for more colour on the decision to slow the pace of monetary tightening to 25bp increments. Deputy Governor Bullock will speak just prior to the release of the Minutes. A quiet day for China today, but some important data coming out tomorrow in the form the GDP q/y, and Retail Sales y/y to keep an eye out for.
USD
The Aussie dollar takes advantage of a slip in US manufacturing data, opening this morning over 70 basis points higher at 0.6290. In the only major piece of data overnight, US Empire Manufacturing for October fell to -9.1, down from -1.5 and below expectations of -4.3. Manufacturing data acts as one of the leading indicators of economic health because businesses react quickly to market conditions, and changes in their sentiment can be an early signal of future economic activity such as spending, hiring, and investment. US Equities liked the data miss which lends itself to a cessation in the acceleration of interest rates, all three major bourses were in the green with Dow Jones +1.9%, S&P 500 +2.8%, NASDAQ +3.4%. The data also opened the door for an AUD rally, reaching highs of 6311 before dropping off slightly this morning. There is no major US Data being released tonight.
EUR
A lacklustre night in European data allowed AUD to remain steady, opening flat this morning at 0.6283. European equities closed with the DAX and CAC up 1.7% & 1.8% respectively as risk sentiment generally rebounded. Last night we also saw the release of the German Buba Monthly Report where German gross domestic product (GDP) is expected to increase by 2% in 2022, 2.5% in 2023 and "almost 2%" in 2024, assuming the Ukraine conflict doesn’t intensify. To the day ahead we have Italian Trade Balance being pencilled in at -0.50B, previously being at -0.36B. Tonight we also have the ZEW Economic Sentiment and German ZEW Economic Sentiment.
GBP
UK’s political instability has allowed a halt any further drop in the AUDGBP pair, opening this morning flat at 0.5529. British equities closed in the green with FTSE up 0.9%. UK’s new Finance Minister Hunt hit the wires scrapping the plan to cut income tax indefinitely and shortening the universal energy support to April 2023. He also alluded to more difficult decisions on spending are yet to be made. Liz Truss has also insisted she will lead the Tories into the upcoming general election, despite recent U-turns in policy direction leaving her battling to salvage her authority. A quiet day ahead for the Brits, however a data heavy day tomorrow with the most important being in the form of core CPI and CPI y/y to keep an eye out for.
NZD
NZD opens strongly this morning, with AUD opening lower at 1.1157 and under pressure in the face of this morning's Kiwi inflation data. The CPI q/q figure, coming in at + 2.2%, stronger than an expected 1.5%. Interestingly this is also the equal highest quarterly CPI number since the start of the pandemic. The RBNZ will be very interested in this number which will certainly influence the size of future rate hikes.