US GDP Goes Up, AUDUSD Goes Down
AUD
AUD trades lower across the board, facing a broad-based selloff after US GDP printed strong figures which increase the chances of further Fed rate hikes next year and facilitating a risk-off environment. Asian equities were higher on the close with the Hang Seng the star performer up 2.7%. The ASX finished Thursday’s session up 0.5%, after Chinese authorities renewed a pledge to prioritise growth next year and to help the property sector recover from its worst fall on record. A weak session for commodities, with Gold -0.3%, Silver -0.1%, Iron Ore -1.3% and Copper -1.3%. China’s economic growth model is moving from one highly dependent on real estate and infrastructure to one in which the so-called digital and green economy play greater roles, analysts at leading Chinese investment bank CICC said. While demand from the U.S. and Europe falls, China’s exports to the Association of Southeast Asian Nations have picked up. In the last month, Beijing suddenly ceased many of the lockdown measures and Covid testing requirements that had weighed on economic growth over the last 18 months. Analysts warn of a bumpy road to full reopening, but they now expect China’s economy to bounce back sooner than previously forecast. A quiet period in economic data ahead for the holidays.
USD
AUDUSD opens lower this morning, having surged higher in yesterday morning and reaching one-week-highs of 0.6767 before steadily declining throughout the rest of the session, trading at 0.6669 this morning. Wall Street plunged and weighed on the pair after US economic growth suffered an upward revision, creating an ‘equities bloodbath’ with the Dow plummeting -1.6%, the S&P dipping -2.4%, and the NASDAQ plummeting -2.9%. US Q3 GDP was revised up to 3.2% against expectations of no change at 2.9%with Personal Consumption up to 2.3% from 1.7% and Core PCE up to 4.7% from 4.6%. Also released and weekly jobless claims were modestly better than expected. The USD firmed in the aftermath as US yields moved higher and equity futures added to losses. Released later in the NY morning, the November Leading Index declined by 1.0%, down from -0.9% and worse than expectations of -0.5%. Little reaction to the data with the USD remaining on the front foot. Today’s focus will be on US Core PCE inflation for November, which may not show the same moderation that was apparent in Core CPI given measurement and weighting differences. We expect relief to come from core goods while core services should remain comparatively firm. Health insurance and transportation services are likely to moderate less than was apparent in the CPI release. US real personal consumption data for November is also out this evening and likely to be soft. Weak retail sales results for the month suggest goods spending contracted. Moreover, high frequency data also point towards softness in services spending. No data this side of Christmas for the Buck.
EUR
AUDEUR trades lower this morning, ranging comfortably within the early 0.63’s before the trend was reversed, giving up the 0.63 handle to trade at 0.6293 at time of writing. A weak session in equities out of the Eurozone, with the DAX -1.3% and the CAC -0.9%. No data yesterday, with the German Buba Monthly Report being released at a tentative time today.
GBP
AUDGBP trades slightly lower this morning, gaining early in the session to reach 3-week-highs of 0.5587 and giving up those gains in the evening, trading at 0.5539 this morning. Interestingly, the FTSE fared better than other indicies, still losing out however less so than the others, dipping -0.4%. UK final 3Q GDP rose by 1.9% y/y, coming in short of preliminary readings of +2.4%. Real disposable income in the UK per head fell 0.5% in 3Q. UK GDP is estimated to have fallen by 0.3% in Quarter 3 (July to Sept) 2022, downwardly revised from a first estimate fall of 0.2%. In output terms, the services sector grew by 0.1% while the production sector fell by 2.5% in Quarter 3 2022 (including falls in all 13 manufacturing sub-sectors) as well as a fall in the construction sector of 0.2%. The level of real GDP in Quarter 3 2022 is now estimated to be 0.8% below where it was pre-coronavirus at Quarter 4 (Oct to Dec) 2019, downwardly revised from the previous estimate of 0.4%. No data out of the UK before Christmas.
NZD
AUDNZD has gained ground, breaking through the 1.07 resistance level reaching December highs of 1.0719 before retreating to trade at 1.0666 at time of writing. No data from across the ditch yesterday, and nothing looking ahead to Christmas.