Improving Risk Appetite Supports AUD Gains

AUD

The AUD opens mixed this morning across the board as risk sentiment improves across markets as a result of last week's US inflation data finally showing signs relenting in the face of higher interest rates. Asian equities enjoyed the buoyant mood and were strong to close the week with the Nikkei up 3% and Hang Seng rising a massive 7.7%. Yesterday news that China is reducing quarantine requirements for visitors may have also added to the improving risk sentiment over the weekend. In commodities, Copper was the big gainer up 4.8%, Gold and Silver up 0.9% and 0.1% respectively, and Iron Ore up 0.8%. A quiet economic calendar day today sees no domestic data, however there is a steady stream of important data kicking off tomorrow with the Monetary Policy Meeting Minutes and finishing with the important labour report on Thursday.

USD

The AUD pushed even further ahead against Greenback into the weekend as the effect of last week's reduction in US CPI took hold, AUD finally reclaiming the 67c handle as it opens this morning at 2-month highs of 0.6690 having traded as high as 0.6715. Early on Saturday morning the US released their Prelim University of Michigan Consumer Sentiment which had further weakened the USD as it delivered well below expected at 54.7 vs 59.5. The DXY (which measures overall USD strength) has now fallen to 3 month lows. Equities had another positive session with the NASDAQ closing +1.9%, the S&P 500 +0.9% and the Dow Jones +0.1%. Today, we have FOMC Member Waller hitting the wires and the data keeps coming all week with Retail Sales & Philadelphia FED Manufacturing Index being among the main data points.

EUR

The AUDEUR opens flat at 0.6476 having briefly traded above 0.65 but unable to consolidate as the EUR also takes advantage of the weakening USD. EUR strength is evident in the EURUSD which has continued well past parity to 1.0352. On Friday, German Final CPI m/m delivered at expectations of 0.9% and the EU Commission board hit the wires forecasting Quarterly GDP to contract in Q4 2022 and Q1 2023 and growth to return in Q2 2023. European equities were up in tandem with other global bourses, the DAX and CAC closing up 0.6%. Plenty of data due from the EU this week starting with this evening's Industrial Production m/m. Looking further ahead, we'll get Flash Estimates for GDP and Employment change and Economic Sentiment from ZEW (Economic Research Sentiment). The ECB also assesses the conditions of their financial systems in a Financial Stability Review this Wednesday with Final CPI y/y data following Thursday evening.

GBP

AUDGBP opens strong at 0.5660 as markets reacted to the UK's worst GDP monthly contraction since March 2021. The GDP showed that the UK economy had contracted in September by a whopping 0.6%, worse than expectation of 0.4% and far worse than August's contraction of 0.1%. A slew of other less important data such as production and services data managed to deliver at or above expectations however they were all overshadowed by the headline GDP miss. Following the data, MPC Member Haskel hit the wires stating that recent indications suggest the UK is already slowing down, the concern being price increases becoming embedded which will result in monetary policy being tighter for longer. At the close, FTSE was down -0.8%. Looking towards data, today we just have the Rightmove HPI m/m. Later this week inflation data is being posted, CPI y/y on Wednesday and Retail Sales m/m to end the week.

NZD

The AUDNZD lost the 1.10c handle in early Saturday trade, opening this morning at 1.0973 after peaking at 1.10416. There was no NZ data to influence the pair in what was a surprisingly volatile range. Today we just have the BusinessNZ Services Index had been delivered this morning at 57.4. A quiet week ahead for Kiwiland, with PPI Input & Output q/q being the main event.