AUD Builds Upward Momentum

AUD

The Aussie Dollar had an overwhelmingly stronger overnight session after some softer US data, though just holding ground against some currency crosses. Asian equities were mostly higher on Tuesday with the Nikkei up 0.1% and Hang Seng climbing 3.9%. The ASX finished 0.1% lower with energy and lithium stocks dragging on the index. The RBA’s Meeting Minutes from its November meeting showed that the RBA is prepared to pause its tightening cycle or return to larger interest-rate increases. The board had considered 25bp or a 50bp move, and decided to move with the former noting the lagged effects of prior rate hikes. In Indonesia, it was reported that Prime Minister Albanese said the meeting with Xi was positive and constructive. President Xi said China and Australia have big potential in trade ties and that Xi hopes Australia can provide a better business environment. In Chinese data that was released yesterday, Industrial production and Fixed Asset Investment Growth in October are in line with the consensus forecasts of +5.0% and +5.8% respectively. But retail sales were weaker than expected and in contraction, shrinking by -0.5% instead of growing by +0.7%. Today will see the release of Australia’s Wage Price Index, which is predicted to advance 3% in the third quarter from a year earlier, the fastest pace since the first three months of 2013. 

USD

The AUDUSD found itself trading in choppy market conditions overnight rising to highs of 0.6797 before retreating back to currently trade at 0.6757 this morning. PPI data from the US pushed equities and bonds higher before news of two stray Russian rockets hitting Poland drove a reversal. By close, the Nasdaq was +1.6%, the S&P 500 +0.9% while the Dow Jones was +0.2%. The AUD strengthened after further signs that inflation is being reigned in as US PPI for October printed at 0.2% MoM and 8.0% YoY, weaker than expectations of 0.4% and 8.3%. Manufacturing activity in the New York area improved a lot more than expected in November, Empire State Business Conditions Index rising to 4.5 from -9.1 in September. This was well ahead of analysts’ expectations for a reading of -5.0. In the US, October retail sales will be released early tomorrow morning. Headline nominal retail sales should be supported by gasoline sales as prices rose by ~3%.
 

EUR

The AUDEUR found some strength as conflict in Europe strikes fear that further escalation is required from NATO, the pair trading at 0.6526. European Equity gains were kept at 0.5% for both the DAX and CAC. After the final trade bell, headlines stated that stray Russian rockets had landed in a Polish town located near the Ukrainian border with a number of casualties reported. It was also reported that Poland had convened a meeting of its national security committee in response. The UER immediately sold off amidst fears that NATO may be more directly drawn into the conflict. The EUR/USD from 1.0370 to lows under 1.0300. There is no major data from Europe tonight, barring ECB President Lagarde speaking at an event in Frankfurt, whilst the ECB’s semi-annual ECB Financial Stability Review is listed as a tentative release.

GBP

The AUDGBP trading at similar levels to yesterday morning despite a brief dip, resuming trade at 0.5688. British Jobs numbers were mixed with an appealing headline figure whilst some underlying data held back the Pound. UK’s Claimant Count Change increased to 3.3K versus -12.6K forecasts and 25.5K prior, whereas the Unemployment Rate rose to 3.6% while surpassing the market consensus and prior readings of 3.5%. Other than the data, chatters that UK Prime Minister Rishi Sunak will unveil a plan to increase the national living wage and give 8 million households cost-of-living payments had mixed reactions. Tonight will see the release of the UK Inflation data, with the CPI print widely expected to be near the peak, although headline inflation is unlikely to slip back into single digits anytime soon. Also penned for release are Monetary Policy Report hearings.

NZD

The AUDNZD didn’t move to much overnight as it continues to trade within a range of half a per cent, now trading at 1.0982. The only piece of data released from New Zealand was the GDT Price Index, which gained 2.4%, a turnaround from -3.9% losses prior. No more data from the Kiwis for the remainder of this week.