Growing Chinese Unrest Hurts Risk Appetite, Undermines AUD
AUD
AUD opens the week lower across the board in an absence of economic data leading into the weekend and souring risk sentiment mainly related to developments in China. Asian Equities were mixed on close with ASX +0.2%, Shanghai Comp +0.4% and Nikkei -0.4%. China announced a cut their reserve ratio by 0.25 ppt with the new ratio effective as of December 5. The cut was smaller than expected with weakness in risk sentiment post announcement pushing commodities to close in the red; Crude Oil was down 2.1%, Nat Gas – 1.1%, gold flat, Silver -0.4% and Iron Ore -0.6%. Civil unrest in China as Covid lockdown protests intensify, which has potential to weaken Australian Dollar, particularly if these protests prove to be prolonged. Today we have RBA Governor Lowe speaking, followed by Retail Sales m/m which is expected to fall by 0.1% to 0.5%. In a data fuelled week ahead, the domestic highlight will be on Wednesday with the release of the Australian CPI print.
USD
With most of the US still celebrating the extended Thanksgiving Holiday markets were quiet and AUD slowly drifted lower, opening this morning down at 0.6720. US Equities were mixed on close with Dow Jones +0.4%, NASDAQ -0.5% and the S&P 500 flat. A fairly quiet day ahead, with only FOMC Member Bullard and Williams Speaking tonight which has potential to sway markets. The Fed will release its Beige Book on Wednesday evening which will contain anecdotal reports gathered from mid-October through to late November speaking to the state and trajectory of the economy. The reports will be considered by FOMC participants in the upcoming meeting. Plenty of other high impact US data scattered throughout the week ahead which will finish with a bang on Friday night with US Non-farm employment data.
EUR
AUD was testing the 0.65 handle in Friday's session before falling off with souring risk sentiment later in the session, opening lower this morning at 0.6480. European equities relatively flat with the DAX flat and CAC +0.1%. Friday’s data indicated Germany’s economy saw stronger growth in the third quarter than expected as consumer spending picked up following the lifting of pandemic restrictions, German Final GDP q/q came in at 0.4% beating expectations by 0.1% and German GfK Consumer Climate came in slightly under expectations with a -0.7 miss at -40.2. A somewhat subdued day for European data ahead, with only the M3 Money Supply y/y and Private Loans y/y to keep an eye out for today. Wednesday evening's consumer inflation numbers will be the European data highlight for the week.
GBP
The AUDGBP see-sawed lower off the back of a varying risk outlook, trading a high of 0.5589 before opening this morning lower at 0.5665. The FTSE saw a 0.3% increase at Friday's close. Not much in the way of GBP data on Friday with just MPC Member Mann speaking, which did little to move the market. Another quiet day ahead with CBI Realized Sales expected to drop from 18 to 2 today. A relatively lackluster week will be highlighted by Gov Bailey Speaking on Tuesday night.
NZD
The AUDNZD pair opens relatively flat at 1.0795 after flirting with the 1.08 handle for much of Friday. No data out of New Zealand until Wednesday with the Building Consents m/m and ANZ Business Confidence, but the main market mover for the NZD will be Gov Orr Speaking on Friday.