AUD Limping into Weekend
AUD
The AUD traded relatively flat across most major currency pairs overnight, the Kiwi Dollar excluded. Currency markets responded negatively to the much larger than expected surge in US April CPI Data on Thursday, which saw the AUD drop across most major pairs. Local equities dropped overnight, Shanghai Comp and Nikkei were down, Nikkei taking the biggest loss of -2.5%, and the ASX dropped below its all-time highs of 7000 points (-0.9%). Commodities were mixed with Gold and Silver maintaining a positive session, while Iron Ore was down -1.8%. Not much ahead on the calendar tonight, markets await Chinese Data in the new week as we expect Chinese Retail Sales and Unemployment figures on Monday.
USD
The AUDUSD pair traded within tight ranges overnight, the pair currently trading at 0.7728 at the time of writing. The AUD struggled to capitalise on the USD after hotter-than-expected US CPI data was released on Thursday, it was reported that inflation in April accelerated at its fastest pace in more than 12 years as the US economic recovery kicked into gear. FED Officials also repeatedly saying they will not raise interest rates or pull back on monthly bond purchases until inflation averages around 2% over an extended period. Equities reversed their recent slide (S&P500 up over 1.2%) as investors looked for value despite the recent CPI data and US PPI beating forecasts. US 10-year yields falling 4 bps to 1.65% and Crude Oil was -3.5% lower. Ahead today we have US Retail Sales and Industrial Production for April which could also suffer from pent up demand and component shortages - both data sets are forecast to expand over 1% MoM.
EUR
The AUDEUR pair trading relatively close to yesterday's open, trading at 0.6397 at time of writing. This currency pair relatively subdued by the recent release of US inflation figures and a European bank holiday yesterday. European equities posted modest gains overnight, CAC up +0.1% and the DAX was up +0.3%. Today the European Central Bank will release the Monetary Policy Minutes from April’s meeting which will be providing detailed explanation about its decision to leave its policy levers unchanged this month. The report is not expected to pull anything new out of the hat, but investors could still go through the text to detect any signs that policymakers are willing to start monetary tightening dialogues.
GBP
The AUDGBP pair still trading around yesterday’s levels, currently trading at a rate of 0.5498. Both currency pairs lacked any firm directional bias after consolidating the previous day’s upbeat US CPI data. There has been a recent upbeat outlook on the UK’s economic recovery from the pandemic, with Governor Bailey commenting this morning that inflation is expected to ramp up and that if their forecasts hold, the UK economy will regain its pre-covid levels by the end of 2021. In addition, a sharp drop in Covid related deaths and new cases, further acting as a limit to downside on the British Pound. Little in the way of economic data today as the markets look ahead for Tuesdays UK Unemployment data.
NZD
The AUDNZD took a significant step back last night as we trade at 1.0755 at the time of writing, a 40 pip drop since yesterday's open. New Zealand’s Business NZ PMI eased from 63.6 prior to 58.4 in April. Although being a second-tier data piece, it still has created doubts over the Reserve Bank of New Zealand’s (RBNZ) rate hike chatters, recently backed by the ANZ report stating 70% odds favoring such a move by next May. No-noteworthy economic data on the calendar today, markets awaiting the obvious catalyst of US driven moves.