Aussie Q2 GDP to Drive Price Action Today

AUD

The AUD is trading higher against most major currency pairs this morning, the NZD excluded. Asian Equities were largely up with the Nikkei posting 1.1% gains the Shanghai Comp up 0.4%. The ASX rallied throughout the day to finish Tuesday’s session up 0.4% (7535) largely driven by gains in tech stocks. Commodities had a relatively subdued session of trade with Iron Ore down -2.3%, Silver down -0.1% and Gold closed with no movement of 0%. Markets ignored the downbeat Chinese data yesterday and seem willing to overlook the recent coronavirus conditions at home for now, AUD managing to brush off these two factors. To the local data today, at 11.30 this morning we will see of the Q2 GDP, a rare occasion before the RBA board meeting next week, with expectations of +0.5% QoQ versus +1.8% prior. Worth noting that if today's number comes in negative (NAB predicts a worse-than-expected result of just 0.1%), then that would all but confirm a double-dip recession considering Q3 GDP is all but certain to be negative as well, which would deliver two consecutive quarters of contraction (the technical definition of a recession).

USD

The AUDUSD pair gained some further bullish momentum, rising to as high as 0.7340 in the late trade before coming back to trade at 0.7316 this morning. All three major US equities closed with next-to-no movement with both the S&P500 and the Dow down -0.1% while the Nasdaq closed with no movement at 15259 points (0%). US 10-year yields rose 2 bps to 1.3% while oil fell 1.1% to $68.40 a barrel. To the data, the ISM manufacturing PMI for August is due this evening from the US. Economists expect a third consecutive decline in the headline ISM Manufacturing PMI from 59.5 in July to 58.5 in August, this being a significant fall. Lower estimates make sense after the last two consecutive drops, plus the resurgent spread of the Delta covid variant weighing on business sentiment. There is also the ADP version of employment data from the US tonight, ahead of the official data release which will come on Friday night. Plenty of potential for movement tonight. 

EUR

The AUDEUR pair also made a gain overnight, currently trading at a rate of 0.6193 at the time of writing. European Equities were down with the DAX down -0.3% and the CAC down -0.1%. In early European data, German unemployment reached its lowest level since the first COVID-19 lockdowns, falling to 5.5%, and beating expectations of 5.6%. In France, CPI MoM was 0.6% up from 0.1% in July, and above expectations of 0.4%. French CPI YoY was also above expectations of 1.7%, printing at 1.9%. Eurozone inflation jumped to a decade high 3%, smashing estimates of 2.7%. Eurozone core price growth was also up, reaching 1.6% from 0.7% in July. This evening there’s a flurry of EU data on the docket with the Eurozone Manufacturing PMI & EU Unemployment report due.

GBP

The AUDGBP followed suit to make a gain with the pair trading at 0.5318 at the time of writing. The London Benchmark FTSE 100 posted a modest loss of -0.4%. Yesterday the UK recorded 32,181 new covid cases and 50 more coronavirus-related deaths in the latest 24-hour period, government data showed. 19,643 people had their first dose of a covid-19 vaccine on Monday, taking the total to 48,048,009 (88.4% of UK adults), And 66,648 had their second jab, meaning 42,790,585 are now fully vaccinated (78.7% of the adult population). Little in the way of data this evening with the UK Manufacturing PMI due, the UK could report a Manufacturing PMI of 60.1 compared to 60.4. This is technically lower however broadly flat.

NZD

The AUDNZD bucked the trend to make a loss before coming back to trade at 1.03809 this morning, a new 17-month low. Although the macroeconomic data releases from New Zealand showed a deterioration in business sentiment, AUDNZD has had a difficult time pushing higher among the pairs. The ANZ Business Confidence slumped to -14.2 in August from -3.8 in July and the ANZ Activity Outlook Index declined to 19.2% from 26.3%. There is little in the way of data in the NZ this week, both antipodeans continue to face pressure as markets continue to eye off the deteriorating covid outbreak in both regions.