USD Gains on News of Fed Chair Powell's Reinstatement
AUD/USD
0.7225
AUD/EUR
0.6427
AUD/GBP
0.5392
AUD/NZD
1.0394
AUD/JPY
82.97
S&P/ASX200
7353
AUD
The AUD performed a mixed result across the board overnight. Asian Equities finished Monday’s session marginally in the green with the Shanghai Comp up 0.6%, the Nikkei up 0.1% while the CSI 300 the star performer as the PBoC signalled possible easing to support the slowing economy. The ASX underperformed its peers falling 0.6% on the close led by a decline in energy and tech stocks. Its another relatively quiet day in the region with Australian Manufacturing & Services PMI’s being the key releases this morning at 9:00am. Elsewhere, New Zealand’s Q3 retail sales figures will be among the releases at 8:45am. However, this print may be largely ignored ahead of tomorrow’s important RBNZ meeting.
USD
The AUDUSD is trading at similar levels seen to Monday, if not marginally lower, trading at a rate of 0.7224 this morning. The overnight news that Jerome Powell would serve a second term as Fed Chairman spurred US Yields and the USD (see below). Both the 2-Year and 10-Year US Yields rose 8bps while the DXY finished 0.4% higher. Wall Street was mixed with the Nasdaq finishing flat while the Dow Jones gained 0.9% and the S&P 500 was up 0.6%. In the event, The Chicago Fed National Activity Index for October rose to 0.76, up from -0.18 and coming in better than expectations of 0.10. No reaction to the data though the local unknit continued up to highs of 0.7273. Headlines crossing the wires confirming that President Biden had nominated Fed Chair Powell for a second term with Brainard nominated as Vice Chair. Looking forward, the US Flash Manufacturing & Service PMI’s this evening will be the key focus for traders.
EUR
The AUDEUR pair gained only slightly overnight, trading as high as 0.6452 before coming back to trade at a rate of 0.6427 this morning. European Stocks were down only slightly with the DAX down -0.3% while the CAC underperformed -0.1%. Across the wires, Germanys acting Chancellor Angela Merkel was quoted saying that Europe’s biggest economy needs tighter measured to control the Covid infections. Merkel told officials from her CDU party that the situation is "highly dramatic", Bloomberg News reported, and warned that hospitals would soon be overwhelmed unless the fourth wave of the pandemic is broken. There’s a flurry of European data on the docket this evening with the EuroZone Manufacturing & Services Pmi’s being the key mentions.
GBP
The AUDGBP is marginally higher and is trading among levels seen to Monday with the pair trading at a rate of 0.5391 this morning. Britain’s FTSE 100 snapped a four-day losing streak on Monday driven by gains in heavyweight mining and financial stocks, the blue-chips index close 0.4% higher, bouncing back from a three-week low last week. After disappointing a rate hike at its previous meeting, market participants begin to be more cautious regarding the BoE’s Governor Baileys comments. Over the weekend, Governor Bailey expressed that inflation could be “elevated for longer,” though there is also the chance that it could not be as permanent as feared. Bailey further added that “there are risks both ways. Obviously, our concern would be that if it gets into second-round effects, it could be elevated for longer.” Governor Bailey expressed that he is uneasy about the inflation outlook. It’s a busier day ahead with the UK’s Manufacturing & Service PMI’s being among the release.
NZD
The AUDNZD edged higher overnight with the pair trading at a rate of 1.03816 this morning. In the event this morning, New Zealand Retail Sales dropped past 3.3% QoQ to -8.3% during the third quarter (Q3). That said, the Retail Sales excluding Autos followed the tune with -6.7% QoQ figures versus +3.4% previous readouts. Markets were unmoved by the release, most likely sitting on hands in anticipation of the RBNZ interest rate meeting tomorrow morning, where markets are all-but-certain there will be a 25 basis point rate hike.