AUD Starts the Week in the Green

AUD

The AUD trimmed some of its recent losses over the weekend after falling from grace last week. Three days of consecutive losses meant that the AUD was on its knees but rebounded despite any critical data to bring upside for the Aussie Dollar. Commodities were only just positive, with Gold up 0.1%, and Iron Ore up 0.3%. What might have given us a boost is an uptick in Equity Markets even with growing global inflation concerns. Asian Equities were stronger with the ASX taking +0.8%, the Nikkei up +1.1% with a strong finish to the week. With little data to start the week, markets will be looking to China for clues as to how the nation is recovering. However, forecasters suggest that October's data is likely to reveal a further softening in momentum. As reflected in the October NBS PMI, a host of supply pressures have hurt manufacturers' sentiment and weighed on output. October is seasonally a strong month for spending, but Retail Sales released at 1pm this afternoon, will likely be impacted by China's "zero-tolerance" COVID policy, which has led to lockdowns across many provinces. On the docket for this week, the RBA's meeting minutes will be released tomorrow, although it is unlikely to give us anything new. On the other hand, the RBA Governor Phillip Lowe will speak on "Recent Trends in Inflation" and his view on medium-term inflation should be keenly followed given the jump in Q3 inflation.

USD

The AUDUSD recaptured the 0.73 handle after a short stint in the 0.72s at the end of last week, now sitting at 0.7330. The Greenback has been under fire evident against a basket of its rivals, the US dollar index DXY was down -0.03% at 95.122. The USD was weaker after some poor data released over the weekend. Consumer Confidence in the US deteriorated in early November with the University of Michigan's Consumer Sentiment Index declining to 66.8 from 71.7 in October. This marked the lowest reading since November 2011. The driving concerns noted were escalating inflation rate and the growing belief among consumers that no effective policies have yet been developed to reduce the damage from surging inflation. Despite the increased sense of risk, US Equities took some modest gains with the Dow Jones up +0.5% while the S&P gained +0.7% and the Nasdaq closed +1.0% higher on the day. No major data out of the US until some retail data out on early Wednesday morning.

EUR

The AUDEUR also reclaiming a significant figure as it trades higher to 0.6401. Increased inflationary pressures were putting a dampener on European Equity markets, as they closed with mixed results. The FTSE losing -0.5% while the CAC was up by +0.5% and the DAX closed modestly higher on the day. European Central Bank (ECB) Governing Council Member Olli Rehn said on Friday that the relief on supply bottleneck may not arrive until toward the end of 2022 fuelling the fire of supply-based pressure. In late Eurozone data, Industrial Production MoM in September was -0.2%, though beating expectations of -0.5%, YoY was 5.2% (4.1% expected). It’s a slower week ahead on the Eurozone data-front, with the Trade Balance being released tonight but should not move markets.

GBP

The AUDGBP sits just marginally higher as ranges for trading remain quite tight, sitting at 0.5461 this morning. After the Bank of England surprised markets by leaving interest rates on hold at record lows, economists are still suggesting that the BoE will still be the first Major Central bank to raise interest rates according to a survey by Reuters. The survey showed that 26 out of 47 economists surveyed view that the BoE will hike its policy rate to 0.25% on December 16. The number of active job postings at UK firms hit 2.68m in the first week of November a record high according to the Recruitment and Employment Confederation, highlighting that the worker shortages that have hampered the UK’s recovery have not eased.

NZD

 The AUDNZD also continuing to fight back after earlier losses last week, climbing to 1.0414 at time of writing. In late data from last week, New Zealand’s Business NZ PSI (Performances Services Index) for October eased from 46.9 to 44.6 while Visitor Arrival for September dropped from -44.0% to -58.1% YoY in September. In addition to waiting on Chinese data, markets will be debating the likelihood of another rate hike from the RBNZ when they meet next week.