AUD Consolidates Recent Gains
AUD
The AUD is holding on to recent gains, as the existing void of macroeconomic data preludes what should be a busier end to the week. Yesterday’s NAB Business Confidence report bounced back in impressive form in September, after back-to-back declines. The index came in at +13, up 19 points from the August reading. The strong gain was driven by improved confidence after the states of New South Wales and Victoria announced reopening plans, as well as an increase in vaccination rates. Choppy trading conditions on Wall St ultimately ended with the major equity indices marginally lower on the day with the Dow Jones and S&P 500 both down -0.2%. Commodities still on a roll at the moment with Iron Ore taking +1.0% though Gold was flat on the day. Currency markets will turn their attention to the mood of consumers locally, with the release of Westpac Consumer Sentiment later today. The index showed a solid 2.0% gain in August, and another strong reading could help lift the Australian dollar. China will also release their Trade Balance today with little surprise expected with external demand remaining subdued, though the ongoing energy crunch could pose some downside risk. Tomorrow morning's local Employment Report will be the main local event for the week.
USD
The AUDUSD pushed higher before retreating back to open a touch higher on yesterday, trading at 0.7351 currently. Overnight the US data kicked things off with the JOLTS Job Reports, with the number of job openings on the last business day of August declining to 10.4million, with this reading lower than the market expectation of 10.9 million, though it had little impact on the Greenback. What likely fuelled the USD’s demand were Fed speakers Bostic and Clarida crossing the wires early this morning. Bostic noted that inflation is well above Fed's 2% goal, noting that persistent supply chain issues will probably last longer than initially anticipated. Clarida said, "I myself believe that the 'substantial further progress' standard has more than been met with regard to our price-stability mandate and has all but been met with regard to our employment mandate," with the bullish commentary teasing markets though Bostic still expects it will be more than a year before the central bank raises rates from current near-zero levels. US CPI could add some fuel to the fire tonight, with the core monthly CPI measure likely increasing in September reflecting the firm energy pricing in markets at the moment.
EUR
The AUDEUR continuing its strong run as it approached the 0.64 mark, before cooling off to the current rate of 0.6371. The EUR had a tough start with powerhouse Germany posting some dismal data. The ZEW Economic Sentiment headline numbers for October showing that the Economic Sentiment Index worsened to 22.3 from 26.5 previous while missing estimates of 24.0. Supply chain issues, low gas storage, and surging energy costs are all difficult headwinds not just for Germany, but Europe as a whole. ECB speaker Stournaras reiterated the view that inflation would fall below 2% in 2022 despite increasing energy prices, solidifying the Council’s stance that ECB did not expect a significant pickup in inflation in the medium-term.
GBP
The AUDGBP following the trend of taking some slight gains as it trades at 0.5406 at time of writing. UK Employment data was the key data of note for the Britts though the results came in matching expectations. Claimant Count Change for September rose to -51.1K better than the August reading at -58.6K. At the same time, the ILO Unemployment Rater dropped to 4.5%, versus a previous reading of 4.6%, in line with expectations. The market reaction was muted, leaving the pair to be influenced mainly by market sentiment, the Federal Reserve bond taper announcement, and the possibility of the Bank of England hiking interest rates.
NZD
The AUDNZD pushing higher, now trading at 2 1/2 month highs and reclaiming the 1.06 handle. The macroeconomic front is sparse with only some secondary data, the REINZ House Price Index (MoM) and the Food Price Index (MoM), both for September being released. With the lack of data, the NZD will take direction from overall market sentiment from the US and China, with little upgrade in health conditions likely on the immediate horizon.