US Mid Term Elections to Dominate Proceedings Tonight
AUD
The Aussie Dollar failed to take advantage of any major gains due to a lackluster night of data, opening mixed against major currency pairs. Asian Equites held their heads above water on close yesterday with the ASX +0.6%, Shanghai Comp +0.2%, Nikkei +1.2%. Commodities on the other hand were mainly lower with Crude Oil -0.7%, Natural Gas -5.5%, Gold -0.1%, Silver -0.2% and Iron Ore +0.7%. Yesterday we saw some weak data coming out of China with Trade Balance coming in at 85.2B, 10.8B under market expectations, along with USD-Denominated Trade Balance also coming in at 587B compared to an expected 702B. Pairing these figures with China’s steady stance on a Covid Zero policy perpetuates growing concerns over the ongoing strength of the Chinese economy. This morning we saw the AIG Services Index, which came in relatively flat at 47.7 compared to the previous 49 figure. Looking to the day ahead, we have Westpac Consumer Sentiment, NAB Business Confidence, ANZ Job Advertisements m/m and most importantly, RBA Gov Lowe speaks tonight.
USD
The Aussie dollar has consolidated gains achieved late last week, opening strongly against the Greenback at 0.6476 this morning. Last night US equities closed in the green with Dow Jones +1.3%, S&P 500 +1%, NASDAQ also +1%. A lackluster day for US data yesterday with only the Consumer Credit m/m data being released, coming in under expectations and missing by 6.5B. Of course, all eyes are on the US Congressional Elections tonight, with current polling models suggests there is an 85% chance that the Republican party will regain control of the House. Control of the Senate appears to be more uncertain. Polling models suggest around a 50%-55% chance for the Republicans, while betting markets place the odds higher at 73%. Should the Democrats surprise and retain control of both chambers, there would likely be a significant market reaction as it could open the door to more meaningful fiscal policy measures than anticipated in coming years.
EUR
The Aussie Dollar is relatively flat against EUR, opening this morning down at 0.6461. European Equities were mixed on close with the DAX up 0.5% and CAC was flat. European data showed signs of positivity for the Eurozone, with German Industrial Production m/m coming in considerably above expectations of 0.2% at 0.6%. Sentix Investor Confidence also showed numbers better than expected, coming in at -30.9, improving by 7.4 from the previous data release. The EURUSD has regained parity on the back of the improved EUR data, currently trading at 1.001. Also, of some interests we had ECB President Lagarde speaking about a “legislative framework enabling a digital euro for citizens and business”. To the night ahead, we await the French Prelim Private Payrolls q/q, French Trade Balance, Italian Retail Sales m/m, Retail Sales for the Eurozone m/m and German Buba President Nagel Speaks.
GBP
The poor start to the week for AUDGBP has continued, the pair slipping further to 0.5610 this morning. UK Equities were in the red with FTSE down 0.5% on close. Only low tier data from the UK last night, having only seen the Halifax HPI m/m (house price index) which came in flat at -0.4%. Today we will see the BRC Retail Sales Monitor y/y tipped at 1.5% and MPC Member Pill Speaks later in the session.
NZD
The AUD opens slightly lower this morning at 1.0895 as the 1.09 handle provides a bit of support for the beleaguered AUD. Today we have the week's major piece of economic data from across the ditch in the form of Inflation Expectations q/q, previous data came in at 3.07% which registered the first decline in inflation expectations since their peak in Q1 this year. The RBNZ will be hoping for a further reduction in this rate as s result of their prolonged campaign of raising interest rates.