Plenty of US Fed Chatter Ahead this Week

AUD

The AUD was under pressure as last week drew to a close, trading at a loss across most major currency pairs this morning. Asian Equities were mostly mixed on Friday with the Shanghai Comp down -0.8% while the Nikkei made a significant rally of 2.1% as the Japanese index played catch up following a holiday on Thursday. The ASX lost -0.4% with mining and real estate stocks weighing heavy. Commodities closed off the week relatively in the green with Iron Ore up 5.3% and Gold up 0.3% while Silver was down -0.5%. It’s a relatively quiet day today, ahead of what is scheduled to be a busy week with Australian Retail Sales on Wednesday and Chinese PMIs on Thursday. Several US Fed speakers will be speaking throughout the week, with voting members Brainard and Williams kicking things off later this evening. Markets keenly observing to see if they carry on the same hawkish tilt that Fed Chair Powell offered last week.

USD

The AUDUSD pushed as high as 0.7316 before coming back to trade at a rate of 0.7260 this morning. All three US Equities posted subdued gains with both the Dow Jones, S&P and the Nasdaq finishing up 0.1%. US interest rates ticked marginally higher. Oil finished the session +0.9%. To the data on Friday, US New Home Sales rose 1.5% to 740k in August, beating expectations of a 1.0% increase to 715k with positive revisions to prior numbers. Over the weekend, Fed’s Mester hitting the wires saying that risk to the inflation outlook were to the upside with tapering appropriate from November and to conclude in the first half of 2022. She also said Fed policy would need to remain accommodative for some time after lift-off. Little in the way of macroeconomic data today with Fed Speak from Williams and Brainard being the key focus this evening.

EUR

The AUDEUR starts the week off with a modest loss, trading at a rate of 0.6194 at the time of writing. European Equities closed Friday off in the red across the board, the CAC losing -0.9%, the DAX down -0.7% and Euro Stoxx 50 down -0.9%. On the data front the German IFO index for September came in at 98.8 (99 forecast). The current assessment came in lower than expected at 100.4 with the expectations index a little stronger at 97.3. German Federal Elections are currently underway and as per the latest poll, outgoing Chancellor Angela Merkel’s center-right Christian Democratic Union (CDU) lags a bit behind center-left Social Democrats (SPD). The center-left Social Democrats (SPD) were on track for 25.5% of the vote, ahead of 24.5% for Merkel's CDU/CSU conservative bloc, projections for broadcaster ARD showed, but both groups believed they could lead the next government. Looking like a closely run race which may offer some EUR weakness. A lack of European data to start off the week with the German Buba Monthly report being the only mention and ECB President Lagarde to speak shortly thereafter.

GBP

The AUDGBP pair trading flat this morning at a rate of 0.5314 at the time of writing. Like European equities, the London Benchmark FTSE closed in the red, down 0.4%. To the data, on Friday, U.K. consumer confidence fell at its sharpest pace since coronavirus lockdown rules were tightened almost a year ago, reflecting a surge in inflation and looming tax increases. September’s 5 point drop to -13 was the biggest decline since October 2020, according to data from the market research firm GfK. It came amid fears of a “potential cost of living crisis,” with households facing surging food and fuel costs, the end of furlough benefits and a 12 billion-pound ($16.5 billion) tax raid from April to pay for health and social care. The figures add to a darkening outlook for the UK economy after official figures showed a stall in July and purchasing managers indicated the weakest growth in seven months. A lack of data today will see a quieter session as traders will likely focus on BoE Gov Bailey's speech this evening.

NZD

The AUDNZD pair bucked the trend to make a gain, trading at a rate of 1.03549 at the time of writing. There’s been a lack of major data/events out of the NZ as both antipodeans fail to seek directional change, markets will be looking for fresh impetus from the ongoing relative health situations and easing of related economic restrictions. It’s a quiet day ahead of a busier week with Chinese PMI’s and Australian Retail Sales on the docket.