Slowing US Inflation Helps AUD Forge Ahead

AUD

The Aussie Dollar climbed higher and saw green across the board, as broad US inflation pressures eased after softer US CPI data this morning. Asian equities gained on the Tuesday close with the Hang Seng up +0.8% and Nikkei rising +0.4%. The ASX closed the session +0.3% higher driven by regional bank stocks. In local data yesterday, the NAB’s Monthly Business Confidence Survey turned negative in November, falling below zero for the first time since December 2021 to -4 from 0 in October. Westpac’s Consumer Sentiment was better than previous reports of -6.9% as the figure came in at +3.0%. This morning will see RBA boss Phil Lowe speak at the AusPayNet Annual Summit, in Sydney. This will be the first public appearance from Lowe since last week’s RBA rate hike, and as audience questions are expected, Lowe could be quizzed on the matter. Tomorrow will see the release of Australian Jobs data, with the Unemployment rate remaining steady at 3.4% in previous months, markets will have a keen eye to see if economic tightening starts to take its toll on the jobs markets.

USD

The AUDUSD traded at 0.6893 in the early hours this morning, highs not seen since mid-September, before settling to trade at 0.6854 currently. US Equities were buoyant after the CPI print, the NASDAQ was trading +0.8%, the S&P 500 gaining +0.5% and the Dow Jones was up +0.2% at final trade. The US Dollar collapsed following the release of the US Consumer Price Index. CPI rose by 7.1% on a yearly basis in November, below 7.3% expected and easing from 7.7% in October. In the same period, core CPI, which excludes volatile food and energy prices, rose by 6%, below the 6.1% expected. A similar reading was seen on a Month-by-Month basis, with 0.1% reading coming below forecasts of 0.3%, whilst the Core m/m came in at 0.2%, 0.3% expected. The encouraging figures fueled speculation the Fed will slow the pace of tightening, with many reports suggesting that could begin with the next FOMC meeting tomorrow morning, with a 50bp hike certainly on the cards. The FOMC will make their decision to lift the rate from the current 4.0%, a 50bp hike would take the cash rate to 4.5% and closer to a terminal rate of 5-5.25%. Another busy night for markets.
 

EUR

The AUDEUR clawed back recent losses to trade at a weekly high of 0.6472, before easing to sit at 0.6442. European Equity markets saw strong gains with the CAC and DAX closing around +1.4% higher. German Final CPI m/m was unchanged and passed without a trace. German December ZEW Investor Expectations was -23.3, coming in better than expectations of -26.4. Euro-area December ZEW expectations rose to -23.6, a significant improvement over last months -36.7. European data remains generally quiet in anticipation of the ECB’s final meeting for the year later this week, which will kick off a slew of data to end the week off, including European PMI data.

GBP

The AUDGBP traded as high as 0.5555 before tempering back to 0.5539 in the aftermath of this mornings US CPI data. The Pound was not helped by some poor Unemployment data, with the UK’s ILO Unemployment Rate rising from 3.6% to 3.7% in October vs. the 3.7% expected, while the Claimant Count Change showed an unexpected jump. The number of people claiming jobless benefits leaped by 30.5K in November when compared to -6.4K posted previously and -13.3K forecasts. The BOE’s Financial Stability Report was released and explained that UK household and business finances are under growing pressure, however, banks are strong enough to support them. Another busy night for the UK with CPI Y/Y set for release this evening, with hopes it can ease away from last months shocking 11.1% reading, forecasters are predicting a fall to 10.9%.

NZD

The AUDNZD trades higher than yesterdays open to currently trade at 1.0607, still not mitigating the recent slump the trading pair has fallen into. No data from the Kiwis yesterday however in early hours this morning, New Zealand Current Account data was -10.21B, on par with expectations of -10.20B. No more data today until tomorrow mornings GDP data, with growth expected to cool as the latest tourist boom eases. Third quarter GDP on a quarterly basis is expected to soften from 1.7% to 0.8%.