Aussie Unemployment Rate Steady at 3.5%
AUD
The Aussie had a busy night and opens relatively flat against the majors, overnight volatility driven by US manufacturing data missing expectations as well as what is becoming a game of musical chairs in the UK PM's seat. Aussie Unemployment data was released yesterday morning with a rate of 3.5%, flat off last month's reading. Employment change missed heavily with 900 new jobs, instead of the expected 25,000, only slight reaction to the data by markets. NAB’s Business Confidence came out around the same time showing an index number of 9, up from last month’s 5. Asian equities finished the session in the red with the Hang Seng the worst performer down 1.4%, the Shanghai Comp being down 0.3%, and Nikkei down 0.9% The ASX fell 1% on Thursday's close with the energy sector being the bright spot in the market up 3.1%. Commodities were also mixed with Gold -0.6%, Silver -0.9%, but Iron up 1.6% and Copper up a massive 2.6%. A quiet economic calendar for Australia for the rest of the week. The big market movers next week will be the CPI q/q and the GDP q/y which are both due next Wednesday. As well as the Chinese data that was postponed due to Xi Jingping’s speech at the congress which saw him sworn in for a third term.
USD
The AUD opens up at 0.6276 against the Greenback this morning, flat on yesterday morning, but not without volatility in between. Last night AUD rallied hard, reaching 0.6355 at the peak, likely helped along by the Philly Fed Manufacturing Index data missing expectations of -5, coming in at an index number -8.7. US Existing home sales came in slightly above expectations at 4.71M vs the expected 4.69M. Unemployment Claims improved slightly for the US, reported at 214K, instead of the 226k last week. Multiple FOMC Members spoke last night. Notable points being Member Cook saying “Inflation remains stubbornly and unacceptably High” – an indicator that the Fed is not looking at slowing down on interest rate hikes anytime soon. Looking to US equities, the Dow Jones was -0.3%, the S&P500 -0.9%, and the NASDAQ -0.6%. U.S bond yields continued upward with the 10 year gaining 10 bps to 4.23%. This spelt an end to the AUD rally which receded as USD recovered inline with the aforementioned risk assets. The last piece of US Data this week is the Federal Budget Balance tonight, currently pegged at an expectation of -173.5B. Big data from the Yanks next week will be the US Flash Services PMI on Monday, and Advance GDP q/q on Thursday.
EUR
The AUD opens up essentially flat against the Euro this morning at 0.6415, after seeing a dip yesterday morning and a similar rally up to 0.6464 last night. Last night at 7pm the Eurozone Current Account missed expectation at -26.3B instead of the -20.3B. German PPI m/m was higher than expectation at 2.3% instead of the 1.5%. European equities were up slightly with the DAX up 0.2%, and the CAC being up 0.8%. the German Buba bank monthly report is out tonight, containing a mixture of relevant articles, speeches, and analysis of current and future economic conditions from the bank’s viewpoint. EU consumer is also out early Saturday morning, currently expected at -30, with anything under 0 indicating economic pessimism. The markets will be watching the ECB closely next week with the interest rate for the Eurozone being announced next Thursday.
GBP
The AUD opens up flat against the GBP at 0.5589, with a similar dip yesterday morning and subsequent rally overnight, before returning to current levels. BOE’s Cunliffe spoke last night claiming the UK government’s power to overrule regulators is concerning. British political news continues to shake up GBP market’s stability, now ex-PM Liz Truss announced her resignation after six weeks in office, becoming the shortest-serving leader in British history, saying she “came into office at a time of great economic and international instability”. Her attempt to roll out aggressive tax cuts, with the intention of spurring much needed economic growth, instead roiled financial markets and crashed the Pound Sterling to it’s lowest ever level against the USD. Which then led to an unprecedented intervention by the BOE, which then drove her poll ratings to the lowest ever recorded for a British PM. Looking forward, GfK Consumer Confidence is out today with an expectation of -52. Retail sales m/m are due tonight currently pegged at a -0.5% expectation, and Public Sector Net Borrowing, markets currently expecting 15.5B.
NZD
We open at 1.1067 against the NZD, up from yesterday morning. However, the dominant trend this week has seen us slip further against our Kiwi compadres, due to the interest rate hike differential between the last RBA and RBNZ announcements. The RBNZ’s statement of intent and statement of performance expectations for the next 4 years was released yesterday, key points being how "Supply constraints have altered inflation dynamics in the economy” and "Similarly, labour market behaviours have changed as workers and employers have adjusted to the effects of the pandemic. As a result, both inflation and maximum sustainable employment must now be understood in a new light.” Data out today is the Credit Card Spending y/y currently expecting an increase of 3%. Next week sees an NZ bank holiday on Monday and the ANZ business confidence Index on Wednesday.