Chinese Data Dissapoints Markets
AUD
In a subdued session the AUD is sitting lower across all the majors. In recent times the AUD has gained from strong performance in US Equities, but overnight the Dow Jones and S&P 500 both posting +0.3% gains wasn’t enough to outweigh weak commodities. Gold was flat on the day, whilst Iron Ore lost -0.3%, and Copper took a beating to lose -1.4%. Also putting pressure on the AUD was some dismal data out of China yesterday. China’s Retail Sales slumped to 8.5% from 12.5% forecasted, and Industrial Production coming in at 6.4% against 7.9% forecasted. The slower-than-expected growth data portrays the growing fears surrounding economic momentum as the world’s second-largest economy battles floods and a resurgence of Covid-19. The Minutes of the RBA’s August Board meeting will be released later this morning although they take on secondary importance as policymakers are not expected to make a move.
USD
The AUDUSD is trading lower this morning, sitting at 0.7339 at time of writing. The US joined China in presenting some paltry data as the Empire State Manufacturing Index for August coming in at 18.3 versus 28.9 expected, with growth significantly slower than last month’s record-setting pace. Escalating tension over the Taliban’s takeover of Kabul is challenging market sentiment. Against this risk-off backdrop, the US 10-year Treasury yields surprisingly dropped to 1.27% despite the USD normally attracting safe haven plays from investors. Looking forward, the US Retail Sales for July is due out tonight, with forecasters expecting a drop of -0.2% versus +0.6% prior, following that will be a speech from Fed Chair Jerome Powell at an online town hall event.
EUR
The AUDEUR also losing ground to trade at 0.6228 this morning. It was a lackluster start to the week for the Europeans with an absence of high-tier macroeconomic data releases and fundamental drivers. Nonetheless, European equities drifted lower, ending the day firmly in the red. The DAX came out best, closing down -0.3% with the CAC losing -0.8% and FTSE losing -0.9%. This evening, Second-quarter GDP data from the Eurozone area will be looked upon for fresh impetus. Investors expect the Eurozone economy to have expanded by 13.7% over the last year since economic growth began to rebound.
GBP
The AUDGBP taking a step back to trade at 0.53 on the dot this morning. The recently high virus infections and the fears of more strains challenging the economic recovery from the pandemic to take the front seat, weighing on shaky risk sentiment. As per the latest count, the UK marked 28,438 new COVID cases and 26 more coronavirus-related deaths versus 26,750 infections and 61 fatalities noted the previous day. Looking ahead, the UK’s jobs report will be the key as the latest Reuters’ poll keeps suggesting that the BOE will raise benchmark rates in 2023.
NZD
The AUDNZD still hovering around 9-month lows to trade at 1.0444 at time of writing. It was another subdued session for NZD traders, likely waiting in anticipation for the RBNZ tomorrow and their all-important Monetary Policy Statement and Cash Rate decision, as the central bank is expected to lift the official cash rate (OCR) off of the record low after “the Committee agreed that the level of monetary stimulus could now be reduced” at its last meeting in July. Currency markets taking a wait-and-see approach until then.