Firm Aussie Q3 GDP Supports AUD
AUD
Reasonably tepid Q3 GDP data yesterday failed to spur much action across AUD pairs which has failed to break any ranges in the last 24hrs. Asian equities closed lower on Wednesday with the Nikkei down 0.7% and Hang Seng falling 3.2%. The ASX ended the session -0.9%. Commodities were all in the green with Gold +0.3%, Silver +0.2% and Iron Ore +0.3%. In what was the major data piece, Australia’s economy underperformed in Q3, with GDP having a modest gain of 0.6% m/m which was lower than the Q2 print of 0.9% and beneath the 0.7% expectation and also marked the weakest quarterly growth this year. Annual GDP climbed 5.9%, an improvement from 3.6% in Q2 but shy of the consensus of 6.2%. The RBA is projecting that GDP will continue to slow through to 2024 and has signalled at least one further rate hike next year. The economy is showing clear signs of slowing down. Services, manufacturing and construction PMIs are all in decline. China released new Covid control measures including scrapping PCR tests in public venues and allowing home quarantine for positive patients and close contacts. The policy will now be applied across China, instead of only in selected cities. There is no significant data today.
USD
AUDUSD opens higher today at 0.6725 having jockeyed either side of the 0.67 handle in the overnight session. Looking at US equities, all three major bourses were in the red once again with Dow Jones -0.2%, S&P 500 -0.3% and NASDAQ -0.7%. There is a lack of top-tier economic data from the US and tonight will also be rather lacklustre with only weekly unemployment claims data which is expected at 230k which is 5k higher than previous forecast. Looking back over the course of this year AUDUSD was heavily led by US equities and the outlook for AUDUSD in 2023 will depend on how US equities will respond to the upcoming US recession. If the market’s current belief in a 'soft landing' in the US gets rattled in coming months, AUDUSD should bear the brunt of the selling pressure - every US CPI print from now on should be a major test of AUD resilience.
EUR
AUDEUR opens slightly higher at 0.6395 this morning after dipping to fresh 9 month lows of 0.6349 overnight. Eurostoxx 50 closed -0.33% and CAC down flat. To yesterday's Euro data and Final Employment change q/q and revised GDP data q/q were both marginally better than expected. Tonight pre-recorded comments from ECB President Lagarde will be released at the European Systemic Risk Board in what is the only potential market mover on the economic calendar from Europe.
GBP
AUD opening slightly lower this morning at 0.5495 having failed a test of the 9-month low again overnight. Yesterday's Halifax HPI m/m data priced in marginally worse than expected at -2.3% from a 0.2% forecast, however had no effect on markets. Although an extremely light on week for data we have RICS House Price Balance being released at 11am and Consumer Inflation Expectations tomorrow at 8:30pm
NZD
The bloodletting for AUDNZD took a breather overnight with AUD opening relatively flat at 1.0580 this morning although fresh 1-year lows of 1.0529 were recorded in the overnight session. Yesterday we had GDT price index data priced in at 0.6% which was quite below its previous figure of 2.4%. There's a distinct lack of meaningful Kiwi data due for the rest of the week.