UK Employment Report Strengthens, Local Version Due Tomorrow
AUD
The Aussie dollar has had a relatively quiet session overnight against the majority of its peers due in part to a lack of significant data, something that will pick up in the second half of the week. The ASX fell 0.1% on Tuesday led by a 1.2% drop in healthcare stocks. Asian equities however compared much better with the Shanghai Comp closing up 0.8%. Commodities were relatively mixed with the Iron Ore closing up 2.4% whereas Copper finishing 0.4% lower. Looking ahead and we have the Westpac Consumer sentiment survey today, however tomorrow's monthly Unemployment report is keenly anticipated and will certainly play into the RBA's considerations for the path of monetary policy at the meeting in early Feb. It's interesting that futures markets are predicting 3 rate hikes this year, however the RBA has maintained that there will likely be no rate hikes this year. This is a discrepancy that will need to be resolved in the value of the AUD as the actual path unfolds.
USD
AUDUSD trading at 0.7184 this morning after reaching a low of 0.7171. There was minimal data to move markets save the Empire State Manufacturing Index which fell short of expectation of 25, instead printing -0.7. The Index surveys around 200 manufacturers in New York state to determine manufacturing sentiment. The NAHB Housing Market Index for January also fell marginally to 83 to come in short of expectations of 84. US Equities also suffered, with both the S&P 500 and NASDAQ closing down -1.1% & -1.4% respectively. However, the release of disappointing data releases was buffered by a $100B increase in TIC Long-Term Purchases which represents an increase of US citizens purchasing domestic securities. Looking ahead the US will release its monthly change in housing permit and building permit grants.
EUR
The AUDEUR has rebounded from overnight lows of 0.6307 and currently trading at 0.6344. The Italian Trade Balance was down from the expected 4.23B, printing 4.16B. The German ZEW Survey for January rose to 51.7, up from 29.9 and better than expectations of 32.2. European equities were down with the DAX & CAC closing down -1% & -0.9% respectively. Looking ahead Germany will release its monthly CPI figures tonight followed by the Eurozone Current Account which is expected to print 20.3B.
GBP
AUDGBP is down from its overnight high of 0.5296 and currently trading back at a familiar 0.5285 this morning. Overnight, the UK's 3-month average earnings were in line with expectations of 4.2% and the Unemployment Rate saw a slight improvement, reducing from 4.2% to 4.1% in January. The number of people claiming unemployment benefits also reduced by 43k which was better than expected. Despite the encouraging employment report, UK equities did not fare as well with the FTSE down 0.3%. Looking ahead there is a slew of important releases coming out of the UK which will be kicked off with the release of their annual CPI figures tonight. This will be followed by a release of both Input and Output PPI figures. Markets are also keenly awaiting the BOE’s Governor Bailey to speak tomorrow morning. Towards the back end of last year the BoE made it clear that an interest rate hike is approaching fast, so with the strong labour force numbers last night, Bailey's comments tonight will be watched closely.
NZD
AUDNZD is currently trading at 1.0608 this morning. The Kiwi released its GDT Price Index early this morning printing 4.6%. The survey measures the change in the average price of dairy products sold at auction. Milk is a key commodity in the NZ economy, as such it enjoys the nickname White Gold. Looking ahead markets are expecting New Zealand to release its monthly FPI which measures the change in the price of food and food services purchased by households.