Inflation Expected to Surpass 5% Today
AUD
The Aussie dollar has had quite the mixed session against most majors since last report, in a what had been a positive week thus far for the AUD. These recent moves could be linked to the market’s risk-off mood amid recession concerns. Also weighing on the AUD are the fears surrounding crucial consumer China data, as well as the cautious mood ahead of important Q2 Consumer Price Index data and the FOMC meeting late into tonight. Asian equities were largely higher on the close, with the Nikkei underperforming its peers down 0.16%, while the ASX finished Tuesday’s session 0.3% higher, driven by gains in energy and resources and the Shanghai Comp emerged the best performer gaining 0.8% on the close. In local commodities Gold fell 0.1%, while Iron Ore fared worse, losing -1.7%. It has been generally quiet on the macro-economic calendar for the region over the last 24 hours, though that is something that’s set to change later this morning at 11:30am, with the aforementioned release of inflation data in the form of CPI q/q and Trimmed Mean CPI q/q predicted to print at 1.9% and 1.5% respectively. The results of this CPI data will shape the RBA's interest rate decision on Tuesday next week with an expected annual rate of inflation to print at over 5%. Also today out of China we shall see the Credit Suisse Economic Expectations release tonight an indicator of economic health for the region.
USD
The Aussie Dollar trades slightly lower against the Greenback this morning having reached a peak of 0.6983 late in yesterday’s morning, falling to a low of 0.6922 in the night and now moderately rising to a trading rate of 0.6944 at time of writing. Overnight we saw the release of a few housing market data points showing some tepid market retraction, but more prominently CB Consumer Confidence printed at 95.7 missing expectations of 97.3 and a previous of 98.4. Another negative session for U.S equities overnight, with the S&P 500 losing 0.9%, the Dow Jones 0.7% and NASDAQ fairing worst, closing 1.9% lower. Quite an eventful night for the US today with a slew of data beginning with Core and Durable Goods Orders, followed by Pending Home Sales m/m before we head in to the Big-ticket item of the night, the FOMC rate decision due at 4am. Currently markets have priced in a 78.2 bps hike for this meeting, which will take the policy rate to 2.5% if it results in an actual hike of 75bps. Chair Powell is likely to acknowledge this in his press conference, while also guiding towards further hikes ahead. Volatility is on the cards early tomorrow morning.
EUR
The AUDEUR pair has made some consistent gains, pushing firmly into the 68s on 3 month highs amid Euro weakness, currently trading at 0.6855 at time of writing. European equities were in the red also, with the CAC losing 0.4% and DAX down 0.9%. In what was an otherwise quiet economic data calendar, overnight ECB’s Member De Cos hit the wires stating inflation rates in the EU would remain high for some time though would return to target in the longer term. Warning risks to inflation outlook in eurozone have intensified. He also added that 50bps rate hikes don’t imply a higher terminal rate and that future rate decisions would be data dependent. Looking ahead we will see a number of GDP and CPI data releases through Friday for individual regions, and that shall wrap up the week for the zone.
GBP
The Aussie Dollar has been trading sideways against the Pound Sterling over the last 24 hours in relatively subdued conditions, with the pair currently sitting at 0.5770 at time of writing. UK Equities closes flat with the FTSE reflecting the pair with little movement of notice. Not much in the form of data out of the UK since last report with only the BRC Shop Price Index y/y printing 4.4%, higher than a previous of 3.1%. UK news is still fixed to the Tory leadership fight for PM between Liz truss and Rishi Sunak, along with ever present fears of recession. Looking ahead not much in the form of relevant market data from the region, up until next week Thursday BOE Monetary policy decision.
NZD
The Aussie dollar makes gradual gains against its little cousin from across the ditch, currently trading at 1.1135 at time of writing. Light-on in the form of macro-economic data from the region with only the ANZ Business Confidence release, set for print at 11:00am tomorrow morning. Looking ahead, nothing of real interest from the region until next week Wednesday with the release of NZ Unemployment data.