Aussie Momentum on Halt
AUD
A fall in risk sentiment put a halt Aussie dollar recent momentum, opening lower this morning against the major currency pairs. A fall in commodities set the stage for the decreasing risk appetite seen during overnight session with Natural Gas -5.0%, Silver -0.1% Iron Ore -1.6% and Gold flat. Asian equities were mixed on close with the Shanghai Comp down -0.4%, the Nikkei up +0.1% whilst the ASX closed Wednesday’s session down 0.3%, with the move lower led by utility and consumer discretionary shares. A fairly quiet day for local data yesterday with MI Leading Index m/m falling flat and the Wage Price Index q/q coming in slightly stronger than the expected for the first time since May 2021 priced in at 0.9% and coming in at 1%. A relatively quiet day ahead outside of Australia’s October Labour force reports which contain the Employment Change and Unemployment Rate, due at 11.30am local time.
USD
Stronger retail sales data out of the US allows the Greenback to halt any further AUD rallies regaining some of its lost strength with the pair opening slightly lower at 0.6737. US Equites were mixed at close with the Dow Jones flat, S&P 500 -0.7% and NASDAQ -1.3%. This drop can be attributed to the sturdy Retail Data release with, Retail Sales m/m coming in at 1.5% beating an expected 1% and Core Retail Sales m/m beating an expected 0.5% by 0.8% also coming in at 1.3%. Import Prices m/m also came in above expectations -0.2% verses an expected -0.5% which was accompanied a mixed results from lower tier data. Tonight, will have a series of FOMC Speakers hitting the wires along with the Philly Fed Manufacturing Index and Unemployment Claims.
EUR
The AUD/EUR retreated from its recently obtained 0.65 handle, falling to trade at 0.6481 this morning. European equities follow the global trend closing lower with DAX -1.0% and CAC -0.5%. Not much in the way of European data last night beside the ECB’s Financial Stability review which was released with comments stating banks may need higher loan-loss provisions and that some asset prices still appear stretched. It also mentioned rate hikes are weighing more heavily on public finances and real-estate markets may be at a turning point. Looking forward, tonight we have the Italian Trade Balance expected to decrease from the previous -9.57B, priced in at -4.05B. We will also see some final CPI figures for the eurozone with Final Core CPI y/y anticipated to come in flat at 5.0% and Final CPI y/y also expected flat at 10.7%.
GBP
Hawkish BoE commentary and a sweltering inflation a pushed the AUD/GBP down overnight, opening down this morning at 0.5650. Strong data out of the UK last night with CPI y/y coming considerably higher than the expected 10.7% at 11.1% core CPI y/y also came beat expectation by 0.1%. PPI Input and Output m/m data came in mixed, with Input beating expectations by 0.3% and Output missing expectation by 0.2%. Surprisingly this data had little effect on currency, likely the large inflation numbers already factored into market expectations. What could have impacted the pair was the Monetary Policy Report Hearings released early this morning with Gov Bailey saying that Britain's very tight labour market was a key reason why further interest rate increases were likely. To the day ahead, we have MPC Member Pill speaking alongside the release of the Autumn Forecast Statement – a year long economic outlook previewing the upcoming Government budget.
NZD
A fairly uneventful session with the Kiwis with the Aussie dollar opening slightly down at 1.0963. A quiet day for NZ data yesterday. This morning we had PPI Input q/q coming in under expectations of 2.6% at 0.8% and PPI Output q/q also coming in under the expected 2.1% at 1.6%.