US Consumer Inflation Meets High Expectations
AUD
The AUD crept higher across most major currency pairs in the last 24 hours, the NZD excluded. The AUD cheered on some broader US Dollar weakness, mainly due to the US CPI data overnight and Fed commentary regarding tapering (see below). Asian Equities closed off their sessions with a gain, Shanghai Comp was up 0.1% and the Nikkei was up a notable 0.7%. The ASX was up 0.3%, finishing the session on a record high closing of 7548.3 points. Commodities were mixed overnight with Gold, Silver and Copper posting minor gains while Iron Ore was down -0.6%. There is no noteworthy data for the Asia-Pacific region. Predictions of imminent US rate hikes and tapering of stimulus should favor the AUD buyers, plus the recent extensions of lockdowns locally and absence of improvement in health numbers in NSW are also challenging risk sentiment.
USD
The AUDUSD pair made decent gains overnight, currently trading at a rate of 0.7373 this morning. US Equities had a mixed session, Dow Jones gained 0.6% and the S&P was up 0.2% while the Nasdaq closed at a modest loss of -0.2%. In early data last night, the US announced that the July CPI (Consumer Inflation) printed at 0.5% MoM, down from the 0.9% though matching the expectations with the YoY result unchanged at 5.4% to be slightly above expectations of 5.3%. Core CPI (excludes food and energy prices) was 0.3% MoM, falling short of expectations of 0.4% but matched with YoY expectations of 4.3%. Commentary coming from a few sources with Kansas City Fed Reserve President Esther George saying the time had come for the Fed to “transition to more neutral settings” and suggested there was an argument that inflation could run above 2% for some time. Tonight the US will release the August Jobless claims and July Final PPI data.
EUR
The AUDEUR pair is trading at a fresh monthly high after some fresh inflation data and tapering talks out of the US helped aid the AUD’s move upward, currently trading at 0.6280 at the time of writing. European Equities closed their sessions off with modest gains with the DAX up 0.4% and the CAC posting gains of 0.6%. In some early European Data, German CPI EU Harmonized MoM and YoY expectations of 0.5% and 3.1% respectively. There is no-noteworthy data on the calendar for the Eurozone.
GBP
The AUDGBP pair followed suit to make a gain overnight, trading at a rate of 0.5317 at the time of writing. The AUD benefiting off the back of the aforementioned US CPI data and Fed talks on tapering. The London Benchmark FTSE 100 hit its highest level since mid-June, up 0.8% closing at 7220 points. It’s a data filled session for the pound this evening with the UK Q2 GDP, Services PMI and Industrial productions being the most notable. Macquarie Strategy expect another sharp rebound in growth during Q2 as the second lockdown was gradually relaxed at the beginning of April. Monthly GDP estimates already point in this direction, and the UK services PMI spent the entire quarter above 60. UK Industrial Production is likely to remain firm as exports to the EU have rebounded strongly post-Brexit, and inventories built up during pre-Brexit stockpiling have already been eroded.
NZD
The AUDNZD pair bucked the trend to trade at a minor loss overnight, currently trading at a rate of 1.04712 at the time of writing. Both antipodeans seemingly moving in equal direction after the recent US inflation data and Fed commentary overnight. Little in the way of data with only the RBNZ due to release the Q3 inflation expectations today at 1:00PM.