US Elections in the Balance Ahead of Tonight's Inflation Data

AUD

The Aussie Dollar opens soft against most majors as global economic risks remain to the downside. Asian equities finished largely in the red with the Hang Seng underperforming, down -1.2%, while the ASX outperformed its peers closing Wednesday’s session +0.6%, with mining stocks leading the gains up 2.5%. The RBA’s Bullock hit the wires stating China’s downside risks for growth are a ‘significant concern’, bolstered by stress in their property market (one of the engines of China’s growth in the past) as well as reduced consumption amidst suppressive Covid-19 prevention measures. She also added there is good reason to think we are nearing the peak of the inflation cycle, while admitting wages growth was stronger than expected three months ago. Yesterday's data showed China’s Produce Prices fell -1.3% y/y in October while Consumer Prices also softened, rising just 2.1% y/y from 2.8% previously. To the day ahead, we see Melbourne Institute’s Inflation Expectations, with the past 2 months' projections consistent at 5.4% y/y, as well as ANZ Job Advertisement m/m. From China, tentative data releases will arrive between November 10 – 15, being M2 Money Supply y/y, expected at +12%, as well as New Yuan Loans, expected at 800B. New Loans will have likely slumped as stringent curbs to stamp out Covid-19 have hurt credit demand.

USD

AUDUSD opens down at 0.6430, with Wall St also falling into negative territory, driven by a turn in risk sentiment ahead of tonight’s key inflation figures. The NASDAQ fell -2.4% while the S&P 500 and Dow Jones each fell -1.8% in the final hours of the session. US Wholesale Inventories for September were revised down to 0.6% from an initial reading of 0.8%, with no reaction to the data. Crude Oil Inventories climbed 3.9million barrels, surpassing expectations of 0.3million as oil prices extend their losses this morning, down -3.5% The US Mid-term elections are currently underway with Biden indicating a possibility that the Democrats may keep the House… “it’s a moving target right now, but it’s going to be very close.” The race for the Senate also remains close. Economists predict a Republican House and a Democrat Senate may be positive for the Greenback in that a hamstrung Biden administration might be left to focus on Presidential executive orders, including more hawkish policy on China. All eyes remain fixed on the outcome. This evening, FOMC Member Waller is due to speak about central bank digital currencies at Queensland University. Audience questions are expected, which may bring about some volatility.

EUR

AUDEUR opens down at 2-week lows of 0.6423 with a lack of data overnight. Headlines that the Russian military had been ordered to withdraw from the occupied Ukranian city of Kherson, with equities on both sides of the Atlantic moving in response. European equities softened into the close with the DAX & CAC each down -0.2%. This evening, Italian Industrial Production m/m is expected at -1.6%, in contrast to the past 2 month’s expansionary figures. The ECB Economic Bulletin is also set to be released this evening, revealing the statistical data that the ECB Governing Board evaluated when marking the most recent interest rate decision (hiking by 75 basis points to 1.5%... The largest hike since 2009).

GBP

AUDGBP opens up at 0.5660 with a lack of data overnight. The FTSE closed down -0.1%. Today, the RICS House Price Balance is expected at 19%, representing the percentage of surveyors reporting a price increase in their designated area. The expected figure demonstrates sharp contractionary expectations given the previous 3 months' figures of 63%, 53% and 32% respectively… The impacts of persistent rate hikes are being felt by many. This evening, MPC Member Ramsden is due to speak at the Next STEP Global Conference titled “Techno-nationalism and the changing prospects for prosperity” in Singapore.

NZD

AUDNZD opens down at 1.0925 off the back of Tuesday’s Inflation Expectations of 3.62% for the quarter… Keeping in mind the RBNZ’s central mandate is to keep inflation between 2 – 3% for the year… The Kiwi’s may be losing their grip on inflation. Tomorrow, we expect BusinessNZ Manufacturing Index figures and the Food Price Index m/m.