RBA Meeting Minutes Surprise, Kiwi CPI Runs Hot
AUD
A relatively mixed performance for the AUD overnight, even as a relatively hawkish RBA meeting minutes offered some hope for Aussie buyers. Asian equities finished the session largely higher with the CSI 300 underperforming down -0.2%. The ASX was +1.7% on the close led by IT and real estate stocks. A quiet night to close on the commodity front with little movement with Gold closing up +0.1%, Silver up +0.3% and Iron Ore down -0.4%. When the RBA fell short of expectations by only raising rates by 0.25% at Octobers meeting, it was assumed at the time that this could be the RBA “pivot”, or the point where the central bank would begin the slow down of hikes. Yesterday’s Monetary Policy Meeting Minutes were thus penciled into be dovish in nature, but gently surprised participants when it was noted that further rate hikes are likely during the outlook period as the monthly CPI continues to show a broad-based pickup in inflation, rents and utilities. A quiet Asian session of data today with China continuing to delay any data releases whilst Australia releases MI Leading Index at 10:30am.
USD
A ranging performance for AUDUSD with slight movement to the upside overnight, with the pair currently sitting at 0.6309. Wall St posted solid gains into the close with the Dow Jones closing +1.2%, while the S&P 500 and the NASDAQ were +1.2% and +0.9% respectively. Little in the way of market moving US data with September Industrial Production rising by 0.4% to beat estimates of a 0.1% increase while Capacity Utilization was 80.3% against expectations of 80.0%. Released a little later, the NAHB Housing Market Index for October fell to 38, down from 46 and below expectations of 43. Today we have the Federal Reserve’s Beige Book which will contain anecdotal reports gathered from early-September through mid-October on the state and trajectory of the economy. This will be considered by FOMC participants as part of discussions at the upcoming November meeting.
EUR
A volatile session for AUD/EUR overnight, trading to highs above 0.6430 before resuming to trade higher to 0.6401 this morning. European equities closed higher with the Eurostoxx 50 up +0.64%. Italian trade balance data closed quite marginally off expectations last night at -9.57b from a 0.50b expectation. The German ZEW Expectations Survey for October beat expectations of -66.5 printing at -59.2. In the Eurozone the Survey result improved from a previous -60.7 coming in at -59.7. Looking ahead tonight we have Final CPI data coming out of the Eurozone expected at a staggering 10%. However, this is not forecasted any higher from its previous results.
GBP
AUD/GBP surged to gain over half a per cent and trade at 0.5568 with uncertainty within UK politics on the forefront of markets. On an equity front, the FTSE 100 closed +0.9% higher from yesterday. Gilts tumbled after the Bank of England dismissed reports that it could delay the sale of bonds, scheduled for October 31. Questions marks still remain over the leadership of Lizz Truss. Headlines from the BOE that financial markets are likely to remain volatile in coming weeks and that there may be a need for new tools for liquidity assurance. Looking ahead we have a plethora of data coming out of the UK. Our biggest takeaways being the CPI data that will come out at 5pm. They are forecasting a 0.1% increase from previous outcomes at 10%.
NZD
AUDNZD took a dive yesterday, and lost the 1.11 handle to trade at 1.1092 right now. A hot CPI print from NZ yesterday posted at 2.2% from a 1.5% forecast, which now has markets expecting a 75-point hike at the next meeting in November. Westpac has also adjusted their forecasts and now expect the Official Cash Rate to reach a peak of 5% for this cycle (previously 4.5%). No other major data from the Kiwis for the remainder of the week.