AUD Firming Up Ahead of Tomorrow's Inflation Data
AUD
The Australian Dollar climbed higher on Monday evening and trades at a gain across most major G10 currency pairs. Asian Equities closed out their session in the red with the Shanghai Comp down -0.8% while the Nikkei Index dipped -0.6%. Australian Shares struggled for momentum on Monday as gains in miners and losses in technology weighed. The ASX 200 closed down flat at 6790 points. little in the way of data domestically, an absent Australian economic docket has left traders adrift to market sentiment. Throughout this week AUD traders will get some cues from Australia’s Q2 inflation report, due on Wednesday morning, which is expected to rise by 3.6%, it’s highest since 1990. This would ramp up hike expectations by the Reserve Bank of Australia (RBA) as they meet next week on Tuesday.
USD
AUDUSD climbed during the evening session on Monday and faced solid resistance again at highs of 0.6965, before coming back to trade at 0.6951 this morning. Wall Street was mixed but relatively subdued overnight with the S&P 500 and the Dow Jones gaining +0.2% and +0.3%, respectively. The Chicago Fed National Activity Index for June printed at -0.19 against expectations of a flat result. Released later, the Dallas Fed Manufacturing Activity Index fell to -22.6 to be worse than expectations of -22.0. Little reaction to this data. It’ll be a quieter start to the week in the way of data as market participants maintain focus on Thursday's FOMC meeting. Fed communications by key members and inflation expectations this week will allow scope for the FOMC to proceed with the expected 75bps hike as previously indicated. It’s worth noting that US that US Treasury Secretary Janet Yellen talked down fears of the US recession on Monday, while saying “A second quarter GDP contraction would not signal recession because of the underlying job market strength”.
EUR
AUDEUR continued its recent momentum from Monday as the pair printed two-month highs, trading at a rate of 0.6803 at the time of writing. European Equities were mixed on the close with the German Dax down -0.3% while the French CAC gained a modest +0.3%. In early data, downbeat printed of the German IFO Business Climate Index slumped to 886 in July versus market forecasts of 90.5 and the previous print of 92.2, pushing German Economist Klaus Wohrlabe to mention that Germany is on the brink of recession. Finally, crossing the wires, ECB’s Kazak said big interest rate hikes may not be over, and that a ‘too-weak Euro is a problem’. He continued by saying he has no objections to the market view of 150bps by June. Moving on, it’s a light calendar in Europe which may keep AUDEUR price dynamics within range.
GBP
AUDGBP followed suit to trade at a gain this morning with the pair trading at a rate of 0.5768 at the time of writing. The London Market opened slightly lower on Monday after another significant week for company earnings and central bank decisions. The FTSE 100 was down -0.3% on the close. Little in the way of domestic data for the pound as traders find themselves caught in political turmoil again. The UK will have a lame duck PM until September when a new leader will be announced. This, presented with a worsening in the cost-of-living crisis, it is uncertain that a new PM in the UK will be able to substantially alter the gloomy tone that has now been weighing on the Pound.
NZD
AUDNZD climbed higher on Monday, as the pair trades at a rate of 1.1104 at the time of writing. In doing so, the Kiwi pair remains at a near monthly high as it snapped up a two-day uptrend, awaiting the key data events. On the data front, it’s a lighter economic calendar, investors will keep an eye on the release of the ANZ Business Confidence this week. The economic data is expecting an improvement to -55 than the prior release of -62.6