AUD Off the Boil Amidst Lethargic Markets

AUD

AUD gradually drifted lower across the board leading into the weekend, a slow finish to a week which started so positively for the Little Battler. Asian equities were mixed to close the week with the CSI down 0.45% and Hang Seng falling 0.3%. The ASX closed slightly higher, gaining 0.2% with bank and mining stocks advancing. Most AUD sensitive Commodities closed in the red, with Gold -0.5%, Silver -0.1% and Iron Ore -1.4%. Late on Friday China’s Central Bank issued rules on foreign institutional investors investing in China’s bond market, which will make China’s bond market more attractive for foreign investors. The rules will improve management on foreign exchange sales and purchases for foreign investors, a theme which is supportive of AUD. With a lighter domestic data calendar this week, investors will be looking forward to the RBNZ’s cash rate decision on Wednesday which may determine whether the risk on sentiment that we have been seeing from investors over the past week continues with a deceleration of the RBNZ's pace of tightening. RBA Gov Lowe gets us underway this evening with a speech titled "Price Stability, the Supply Side and Prosperity".

USD

AUDUSD meandered around leading into the weekend, either side of the 0.670 handle before opening this morning slightly down at 0.6673. A calmer session on Wall St to finish last week with the NASDAQ closing flat, while the S&P 500 and the Dow Jones gained 0.5% and 0.6% respectively. Friday's Philly Fed Manufacturing data came marginally below expected at -19.4 from a -6.0 expected. Several FOMC participants will be making public remarks this week. Most notable will be comments from voting members Mester (FRB Cleveland), George (FRB Kansas City), and Bullard (FRB St. Louis). On Thursday we have Flash Services PMI data expected at 48.0 as well FOMC meeting minutes later into the morning. The US finishes the week with another bank holiday to celebrate Thanksgiving.

EUR

AUDEUR limited to a 40 pip trading range on Friday, closing basically flat on the day and opening this morning at 0.6450. Equities closed slightly higher with CAC up 1% and Eurostoxx 50 +0.1%. ECB President Lagarde spoke on Friday stating that the ECB expects to raise rates further and that a recession is unlikely to quell inflation significantly. Lagarde also said that a move from dependency to diversification on energy will have ramifications for years to come and that they may have to pay a premium for LNG for quite some time. No data of note from The Zone tonight and looking ahead this week, the main data comes on Wednesday with Manufacturing and Services PMIs from Germany, France and the EZ as a whole. 

GBP

AUDGBP continued its downtrend into the close on Friday currently opening at 0.5612. The FTSE 100 closed 0.5% higher on Friday. Friday's data showed Retail Sales printing at 0.6%, up from 0.5% expected and decently better than its -1.5% previous result. We have several MPC member talks throughout the week to discuss economic conditions and central bank responses, as well Flash Manufacturing and Flash Services PMI data coming out on Wednesday night.

NZD

AUDNZD has lost its 1.09 handle into Friday's close to finish a poor week during which the AUD gave up 2 cents to its Trans-Tasman cousin, opening at 1.0843 this morning. On Wednesday we have the RBNZ announcing the official cash rate, with markets still expecting 75bps worth of tightening which would take the new rate up to 4.25%. We also have the RBNZ Monetary Policy Statement, RBNZ Rate Statement as well RBNZ Press conference following through later that afternoon. Look for AUDNZD volatility on Wednesday around the decision at midday.