Local CPI Data Due at 11.30am Today
AUD
The AUD was relatively subdued overnight, trading at similar levels seen to Tuesday. Asian Equities were mixed during trade with the Shanghai Comp down -0.3% while the Nikkei rallied strongly, fueled by earnings optimism and Wall Street gains. The ASX stalled and finished marginally ahead, up 2.4 points higher at 7443.4. Commodities were up overnight with Gold, Silver and Iron Ore all posting gains. The prevailing risk-on market mood keeps the buoyant tone intact around the Aussie dollar as surging Iron Ore prices in China remain to be the main catalyst behind the Aussie’s upbeat momentum. The Dalian Iron ore prices have extended their rebound from multi-week lows amid a set of weekly industry data which showed a drop in Iron ore shipments due to the escalating energy crisis worldwide. It’s a busier day ahead, beginning in Australia. Q3 CPI inflation data to be the main focus, particularly given the backdrop of rising yields and the strong Q3 New Zealand inflation print. There are expectations the headline CPI will have risen by 0.9% q/q and 3.2% y/y. ‘Underlying’ inflation is expected to be between 0.4-0.5% q/q but likely to round down to the lower end of that range.
USD
The AUDUSD pair consolidates gains around the .75 handle, trading at a rate of 0.7502 at the time of writing. US Equities closed higher as the continuing strong earnings pushes the major indices toward record levels. On the day, the Dow Jones and the S&P both closed at all-time-highs and the Nasdaq climbed 0.6%. A range if US housing data released with the FHFA House Price Index for August up by 1.0%, falling short of expectations of a 1.5% gain. Case Shiller House Prices for August rose 1.17% MoM and 19.66% YoY, both a little weaker than expectations of 1.50% and 20.00% respectively. September New Home Sales meanwhile rose 14.0% to 800k, beating estimates of a 2.2% increase to 756k. Also released, October Consumer Confidence rose to 113.8, up from 109.8 and better than expectations of a decline to 108.0. Finally, the Richmond Fed Manufacturing Index rose to 12 in October, up from -3 and higher than forecasts of 5. Next ahead on the docket for the pair remains the US CB Consumer Confident data later today while the Aussie traders will also closely follow sentiment ahead of the AU Q3 CPI report.
EUR
The AUDEUR barely advanced overnight, sitting within 5-month highs and trading at a rate of 0.6472. European Equities closed higher on Tuesday as strong earnings updates shrug off fresh worries from China’s property sector. Germany’s DAX surged 1.01% and France’s CAC advanced 0.8%. The U.K.'s decision to leave the European Union has resulted in an "economic catastrophe" for Britain, European Commissioner for the Internal Market Thierry Breton said Tuesday during an interview with French broadcaster BFMTV. "Consider that after they said they could regain prosperity, which meant to some extent that every EU national would be kicked out — at least a large part of them — well now they need to come back, because nurses are missing. There are 100,000 truck drivers missing ... It is what it is and we deplore it," he added. Little in the way of local data this evening with markets expected to closely follow the Aussie Q3 CPI data and the US CB Consumer Confidence report.
GBP
The AUDGBP pair followed suit to trade marginally higher this morning, trading at a rate of 0.5451 at the time of writing. London’s FTSE 100 rose for a third straight session on Tuesday as the global mood was buoyed by record highs on Wall Street indices. "Strong corporate results are helping with sentiment. Tomorrow's Budget in the UK and Thursday's European Central Bank meeting may help return the wider economy to the forefront of investors’ minds," said Russ Mould, investment director at AJ Bell. "Whether this will be supportive or have a negative impact on markets remains to be seen." With expectations of an interest rate hike next month, a BoE rate-setter Silvana Tenreyro said on Monday she saw no urgency to raise rates, adopting a different approach than Governor Andrew Bailey who signaled last week that the BoE would act to contain inflation risks. Little in the way of local data with only the UK Budget reveal being of note, with concerns around a potential tax hike that may be unveiled in the budget announcement tonight.
NZD
The AUDNZD pair consolidates after a sluggish performance, trading at a rate of 1.04474 at the time of writing. in the event, New Zealand (NZ) Trade Balance shrank more than $-2139M (revised) prior to $-2171M in September to mark the all-time low MoM figures. However, the Imports and Exports were better than their previous readouts as the former rose past $6.495 billion to $6.57 billion whereas the latter grew to $4.4 billion versus $4.351 billion. No reaction to the downbeat data. AUDNZD traders will play close attention to ANZ’s monthly sentiment data for October today at 11am before the Q3 Inflation figures for Australia at 1130am.