AUD Holds Ground as Global Cases Skyrocket

AUD

The Aussie Dollar starts the week mixed against the majors. There was an absence of local data leading in to the weekend, however the ASX was up the star performer for Asian equities gaining1.3% while the Shanghai Comp was down 0.2% and the NIKKEI remained unchanged. In Commodities, Gold rose slightly by 0.2% while Iron Ore fell 0.5%. Recent volatility in currencies amplified by low liquidity over the extended Christmas break period will be reset this week as investors begin to return from their break. However, with the return of normal working conditions will also come a slew of economic data, so get ready for a fast start to the year. The local data starts to build today in the form of Melbourne Institute's Monthly Inflation Gauge at 11:00 and Building approvals set for release at 11:30. Out of China tonight we will be seeing the M2 Money Supply y/y and New Loans data from the Peoples Bank of China. Looking ahead tomorrow we will see the release of Retail Sales m/m and Trade Balance data locally. There is no RBA meeting for January (we'll need to wait until early Feb), however there's more Chinese data due later in the week. 

USD

The Aussie is trading against the Greenback slightly higher at 0.7175 this morning after a topsy-turvy reaction to Friday night's employment report from the US. In the event, the US added 199k jobs in December, down from a positively revised 249k and much worse than expectations of 450k. Despite the headline miss, the other details were positive with net revisions to the prior 2 months coming in at +141k while the unemployment rate fell to 3.9%, down from 4.2% and better than expectations of 4.1% with the participation rate steady at 61.9% as expected. Average hourly earnings also were firmer, rising 0.6% MoM and 4.7% YoY, higher than expectations of 0.4% and 4.2% respectively. The USD was initially weaker in response to the headline miss though soon rallied as markets interpreted the details. In US Equities we saw Wall St experience its worst beginning to a new year since 2016 with the NASDAQ falling 1.0% and the S&P 500 by 0.4%, while the DOW JONES did not change at all. Looking ahead in the week on Wednesday we’ll get FOMC Members Mester and George set to speak followed by Fed Chair Powell Testifying and the IBD/TIPP Economic Optimism report. Also, later in this week we’ll be getting a slew of major US data in the form of CPI, Core CPI m/m data out Friday followed by Saturday’s PPI and Core PPI data followed by more Unemployment Claims. As mentioned above, it's a fast start to the year!

EUR

The AUDEUR pair trading relatively flat, a little lower than last Friday at 0.6317 at time of writing. In Friday's European data, German Industrial Production come out worse than expected, however the equivalent release from France was ahead of expectations. The Eurozone’s CPI Flash Estimate data up to 5.0% just above projected 4.8% and previous 4.9% with the Core CPI Flash Estimate y/y fairing similarly at 2.6%. Retail Sales from the EZ were also positive, with a gain of 1.0% against projected -0.4% and last month’s 0.3%. European equities were hurting into the weekend; the DAX was down -0.6% along with the CAC -0.4%. Tonight we'll get Sentix Investor Confidence and the European Unemployment Rate, currently sitting at 7.3%.  The highlight of the week from the EZ will be ECB's President Lagarde set to speak on Friday evening.

GBP

This morning the AUDGBP pair trading at 0.5279 which is fresh monthly lows, having continued its prolonged downward trajectory into the weekend. In UK data releases we saw Construction PMI slightly above projection at 54.3 against forecasted 53.9and previous 55.5. Housing Equity Withdrawal q/q much worse at -7.1B compared to the forecasted 3.8B and previous 6.1B release. Saturday and Sunday mornings MPC Member Mann Spoke with quite dovish sentiment overall. Tonight we’ll be seeing GDP estimate, however the bulk of the week's UK related data is released on Friday evening, including official GDP, Trade Balance amongst other things.

NZD

Nothing much to write home about here, AUDNZD currently trading at a familiar 1.0598 at time of writing. The data from across the ditch doesn't really pick up until next week, so volatility here is likely to remain subdued for now.