Local Labour Market Report Due Today

AUD

The Aussie Dollar opens mixed against majors, with the ASX up +0.3% led by utility and industrial stocks. Asian equities were mixed on the close with the Hang Seng the worst performer falling -2.4%. Light in the way of data over the past 24h, with the Melbourne Institute (MI) Leading Indicator reporting flat at 0.0%. Notably, one of the component figures in the MI Leading Indicator, the 6-month annualized growth rate, fell from -0.22% to -1.15% in September. It’s now at the lowest level since 2020 Covid lows, and prior to that, since early 2016. The Institute also forecasted that economic growth will slow from 3.4% in 2022 to 1.0% in 2023. To the day ahead, major employment data to be released at 11:30 with the Unemployment Rate expected to remain broadly steady at 3.5% with an overall change in employment of +25k. Indicators of near-term labour market conditions have become somewhat mixed rather than being unilaterally strong as was the case a few months ago. To China, the 1-year Marginal Lending Facility Rate and Loan Prime Rates will be announced later today… Expected to remain unchanged. No sign of when China’s delayed GDP & other economic data will be released amidst Communist Party gatherings against the backdrop of a faltering economy.

USD

The AUDUSD opens flat at 0.6272 while weaker sentiment returned to Wall St overnight, with the NASDAQ down -0.8%, the S&P 500 -0.6% and the Dow Jones -0.3%. US Housing Starts for September fell by 8.1% to 1.439 million, slightly worse than expectations of a 7.2% decline. This represents early signs of the strain placed on households by sharply rising mortgage rates. It appears that most developed markets central bankers are accepting a contraction in house prices as a necessary evil in the process of fighting inflation. Given the elevated weighting of shelter price movements in the US inflation basket, a (controlled) downturn in house prices could mean a faster slowdown in inflation in 2023. The FED released their latest Beige Book which noted that economic activity had expanded modestly in the reporting period, though conditions differed across regions and industries. Weakening demand has brought about further pessimistic outlooks, while there are signs that inflation is lightly moderating in some districts. This evening we see the Philly Fed Manufacturing Index expected at -5.0, being a survey of approximately 250 manufacturers examining the relative level of general business conditions, while Unemployment Claims and Existing Home Sales are forecasted to remain broadly flat at 229k and 4.69 million respectively.

EUR

The AUDEUR opens flat at 0.6417 with European equities slightly down on the close. The DAX finished the session -0.2% while the CAC closed -0.4%. In the Eurozone, Final CPI for September was revised down to 9.9% from a prior 10.0%, while the Core measure arrived on-expectations of 4.8%. The largest upward contributors came from housing and household services (including electricity, gas and other fuels), food and non-alcoholic beverages. This afternoon, German PPI m/m is expected at 1.5%, down from September’s 7.9% while the Current Account is expected at -20.3b.

GBP

The AUDGBP opens up at 0.5590 as the UK saw September’s CPI y/y hit 40-yr highs of 10.1%, being largely driven by increased food prices. BOE’s Cunliffe said that the central bank was not made aware of Chancellor Kwarteng’s fiscal plans before its September 2022 meeting with the usual briefing not delivered. He also said that halting inflation was necessary for financial stability, while the Gilt market would cope with QT. Input PPI data arrive at +0.4%, above contractionary expectations of -0.4%, while Retail Price Index y/y came in at a staggering 12.6% and the House Price Index y/y reported an increase of +13.6%. No data today as all eyes remain on the UK government’s ever-shifting fiscal rigour. The latest Chancellor, Jeremy Hunt, delivered a policy U-turn earlier this week, paving the way for a radically different policy agenda many are now speculating on widespread budget cuts after government offices suggested further savings worth 15% of the budget may need to be found by the government.

NZD

The AUDNZD opens down at 2-month lows of 1.1055 as markets grapple with Tuesday’s surprise Kiwi CPI q/q reading of +2.2%, surpassing expectations of +1.5%. No data over the past 24h while tomorrow’s Trade Balance figure is expected at -1.4b, up from September’s figure of -2.4b.