AUD Consolidating Widespread Gains

AUD

The AUD was trading higher against most major currency pairs overnight with the Euro pair being the star performer. Asian Equities were mixed overnight with the Shanghai Comp down -0.2% while the Nikkei gained 0.6%. The ASX closed higher up 0.4% with energy stocks being the only sector finishing significantly lower. Commodities closed modestly in the green with Silver up 0.5%, Gold up 0.2% while Iron Ore closed with no movement. In the event on Monday, Chinese Industrial Production rose at a YoY pace of 3.5% in October, above economist forecasts for 3.0%, while Retail Sales rose at a pace of 4.9% YoY, above the forecast of 3.7%. Looking forward, today’s November RBA Board Meeting Minutes will take the reduced importance given we have already heard directly from the Governor and had the quarterly statement since the board meeting.

USD

The AUDUSD managed to recover some of the previous week’s losses with the pair trading at a rate of 0.7347 this morning. Wall Street finished flat with what was a quiet session with all three major US Equities closing at almost no movement. Oil fell as Biden faced criticism about the impact of rising costs, Brent fell to lows of $81.20 and US 10-year treasury yields rose 5bps and traded below 1.5400. It was a quieter day on the data front on Monday with the NY Manufacturing Survey being of key note. US Empire Manufacturing for November printed at 30.9, up from 19.8 and better than expectations of 22.0. In the US, the Retail Sales for October will be published this evening with anticipations of a strong result. High frequency data suggest spending accelerated during the month and the Chicago Fed's estimate is for a +2.3% MoM rise in ex-auto sales. Auto sales volumes also rose (+6.6%) for the first time in several months.

EUR

The AUDEUR gained momentum and pushed to highs of 0.6465 before coming back to trade at a rate of 0.6461 at the time of writing. European Equities closed with modest gains as both the DAX and the CAC closed on either side of 0.4%. Eurozone Equities have been gaining for six weeks straight to record highs on the optimism that economic growth can overcome inflation, tapering and supply risks. ECB’s Lagarde on the wires, maintaining her stance on inflation by saying that despite the current uptick in inflation, that inflation expectations were subdued and conditions for a rate rise were very unlikely to be satisfied in 2022. Lagarde refrained from touching on what the policy strategy would look like in 2023. There’s a flurry of EuroZone data on the docket this evening with the EZ CPI, GDP and Flash Unemployment being the key data of note.

GBP

The AUDGBP seesawed to highs of 0.5490 before coming back down to trade at a rate of 0.5473 this morning. UK’s FTSE 100 Index inched up 0.1%, gains were limited as miners slipped 1.5% pressured by global moves to reduce coal use and a big drop in China’s steel production. Inflationary pressures and supply chain problems have weighed on UK's economic recovery, with the FTSE gaining 13.7% this year but still underperforming its peers in Europe and the United States. BoE’s Governor Bailey on the wires speaking before the UK’s Parliament Treasury Select Committee (TSC), said that all future BoE policy meetings are now “in play” for a rate rise. He added that, given the very high uncertainty in the economy, it would be hazardous to give specific forward guidance about when the hikes may come. Fellow MPC member Michael Saunders, also noted that the risk of delaying the raising of rates is that they might then have to go up faster and further. Little reaction to the BoE members speak. To the data, tonight’s UK unemployment figures will be in focus as the furlough scheme ended last month. There had been concerns that with more than a million workers still on the scheme when it came to an end in October, its withdrawal could lead to a spike in unemployment and dent the UK’s stuttering economic recovery from the pandemic.

NZD

The AUDNZD followed suit to trade higher this morning with the pair trading at a rate of 1.04250 at the time of writing. AUD/NZD has recovered the previous week’s losses as the Kiwi is affected by better-than-expected Chinese economic data which showed Retail Sales and Industrial output rise in October. With a lighter economic calendar on Monday, both antipodeans will look for impetus from other places like the RBA speech today at 11:30am and the upcoming RBNZ interest rate decision next week.