Live RBA Meeting at 2.30pm Today

AUD

The AUD was mixed across most major currency pairs overnight. Asian Equities were also mixed on Monday with the Hang Seng the standout performer up 2.6% following the Liberal Democratic Party maintaining its outright majority in the Japanese parliament, while the Shanghai Comp was mixed -0.1%. The ASX 200 Index closed 0.6% per cent higher, at 7,370.8 points. All sectors of the market gained ground with exception of financial markets. Commodities had a mixed performance of trade with the Iron Ore down -2.3% while both Gold and Silver finished with minor gains. In Australia today, before the race that stops the nation (Melbourne Cup), all eyes will be on the RBA. With the Bank not stepping in to defend its 0.1% yield target, there’s expectations that the RBA will formally walk away from the target today. This would pave the way for Governor Lowe to change his forward guidance on the cash rate to be for the first hike to likely come before 2024. Governor Lowe may also push back on market expectations for several cash rate hikes over 2022, including by pointing out that there is not yet hard evidence of a widespread strengthening in wages growth (and possibly by noting that the reopening of Australia’s international border could alleviate some pressure in the labour market).

USD

The AUDUSD pair showed some resilience, having temporarily dipped below the .75 level before coming back to trade at a rate of 0.7515 this morning. A somewhat muted start to the week saw all three major US Equities post minor gains overnight with both the Dow Jones & the S&P 500 up 0.1%. In the US, Manufacturing PMI was revised down to 58.4 from a flash reading of 59.2. Released shortly afterwards, ISM Manufacturing for October printed at 60.8, down from 61.1 through better than expectations of 60.5. In terms of the key sub-indices, Employment and Prices Paid beat expectations though New Orders fell.  Also released and September Construction Spending declined by 0.5% to come in much weaker than expectations of a 0.3% gain. To the data ahead, and investors might refrain from placing aggressive bets heading into this week’s key Central Bank risks with the RBA today announcing its policy decision and will set the tone ahead of the critical FOMC policy update on Wednesday.

EUR

The AUDEUR was marginally lower this morning with the pair trading at a rate of 0.6471 at the time of writing. European Stocks climbed to a record high as corporate earnings continued to support risk appetite with the CAC up 0.9% and the DAX closed up 0.7%. European stocks last month posted their best gain since March, bolstered by earnings reports and strength in defensive sectors as well as financials, which benefited from higher bond yields. On the data front, German Retail Sales for September MoM were -2.5% missing expectations of 0.4%, YoY printed at -0.9% (1.8% expected). Little in the way of local data this evening with only the Eurozone PMI’s being the only data of note. It is now a battle of the central banks and data, as strong EU data is now starting to test the European Central Bank's dovish resolve.

GBP

The AUDGBP bucked the trend to trade at 6-month highs this morning with the pair trading at a rate of 0.5501. The FTSE 100 index made a bullish start to the new week, hitting a new coronavirus pandemic high at one stage before easing back from that peak. At the close, the UK blue-chip index was 51.05 points, or 0.7% higher at 7,288.62, below the day’s peak of 7,303.89. In the UK, PMI Manufacturing for October was 57.8 beating expectations of 57.7. There is no local data on the docket today. The key theme to watch this week is Thursday’s Bank of England meeting; economists and money markets are split on whether or not the bank is going to go ahead with a 15bps rate hike. 

NZD

The AUDNZD pair was marginally lower, trading at a rate of 1.04677 this morning. The Reserve Bank of New Zealand's governor, Adrian Orr, stated overnight that the unsustainable level of house prices poses monetary, financial stability challenges. While accepting the fact that New Zealand’s housing market challenges monetary and financial stability, RBNZ’s Orr also said, per Reuters, “Expect to see an easing in house prices over the medium term.” There is no major data locally, Kiwi is at the mercy of overseas catalysts with RBA being the key.