AUD Volatile in the Overnight Session
AUD
Hawkish RBA minutes revealed during last week cushioned the AUD from falling on Friday's weak Aussie PMIs. Asian equities were mostly higher on Friday’s close with the Nikkei up 0.4% and Hang Seng rising 0.2%. The ASX fell 0.4% however closed out its best week since March 2022 as tech stocks rallied. Commodities were mixed on the close on Friday, with Gold gaining 0.5%, Silver losing -1.3%, Iron Ore gaining 0.2%, and Copper gaining 0.8%. In the Asian session, the Australian PMIs slowed but remained in expansionary territory, triggering some downward pressure on the AUDUSD. Nevertheless, the RBA minutes released earlier in the week indicating the need for further rate hikes offered some cushion for the AUD. In the meantime, China revealed its intentions to consolidate its economic recovery and prioritize stable prices and employment, battered by Q2 Covid-19 lockdowns, which almost dragged the economy into recessionary territory. Australian Prime Minister Anthony Albanese has requested China to remove its trade sanctions against Australia to begin repairing the fractured relationship. Canberra and Beijing have begun face-to-face communications. Albanese said "I said that before the election - regardless of the outcome - China has sanctions against Australia that should be removed. They're damaging the Australian economy and jobs, but they're causing damage to the Chinese economy." This week, the Australian economic calendar will feature CPI data on Wednesday which will be the big-ticket item that the RBA will be keeping a close eye on to decide on the size of next rate hike in just over a week's time.
USD
AUDUSD trades sideways since Friday’s open, having touched over one-month highs of 0.6977, coming back down to trade at 0.6919 at time of writing. The AUDUSD rose for the second consecutive day on Friday, registering solid gains amidst a fragile market mood, which shifted sour spurred by weaker than expected US PMIs, showing contraction lying ahead and a recession could be near, while the Greenback begins to par some of its earlier losses. Wall St ended a positive week on the back foot with the NASDAQ closing -1.9%, the S&P 500 -0.9% and the Dow Jones -0.4%. During the New York session, S&P Global revealed July’s preliminary figures for the US, which showed that the manufacturing index ticked higher, but the services one dropped below 50. Therefore, the S&P Global Composite Index plunged to 47.6, further confirming the ongoing slowdown of the US economy. The economic calendar is dominated by U.S. centric data with the spotlight firmly pointed at the Federal Reserve’s interest rate decision on Wednesday night, markets currently expecting another 75bps rate hike.
EUR
AUDEUR trades marginally lower this morning, having touched over two-and-a-half-month highs, trickling back down to trade at 0.6762 at time of writing. The European Central Bank President Christine Lagarde said in an interview with Germany's Funke Mediengruppe published on Friday, the ECB will raise its interest rates until inflation falls back to its 2% target. The governing council will review the situation and decide on the right pace for next steps depending on the incoming data. Noted ECB hawk, Robert Holzmann, has also made comments - "We will see in the autumn what the economic situation is. Then we can probably decide if we do another 0.5% or less." Looking ahead for economic data, this afternoon at 6pm German ifo Business Climate will be released, along with CPI data being released on Friday.
GBP
AUDGBP trades lower this morning, having reached over two-and-a-half-month highs of 0.5809, before descending back down to trade at 0.5756 at time of writing. The FTSE stayed relatively flat on Friday’s close, gaining 0.1% overall. On the UK side, UK Retail Sales contracted, showing the pressure of elevated prices in the UK. June sales dropped by -5.8% YoY, more than estimations, while the monthly reading shrank -0.1%, less than the -0.3% contraction estimated. Later, UK S&P Global PMIs for July held above the expansionary territory, easing some pressures on the shoulders of the Bank of England (BoE) Governor Andrew Bailey. Nevertheless, the political issues surrounding the resignation of the current PM Boris Johnson keep Britons entertained with the battle between Rishi Sunak and Liz Truss. This week, a relatively absent docket in the way of data for the UK.
NZD
AUDNZD trades slightly lower this morning, having scraped 4-day lows of 1.1038, before recovering to trade at 1.1085 at time of writing. ANZ Business Confidence data on Thursday is the highlight of this week's data docket.