Second Consecutive Quarter of Negative US GDP
AUD
The AUD opens flat or down against its major currency pairs this morning, after what has been a generally good week for the little battler. Asian equities closed largely higher with the Hang Seng underperforming its peers down 0.2%. The ASX finished Thursday’s session up 1.0%. In commodities, a mixed bag with Gold and Silver gaining 0.1% and 0.4% respectively, Iron Ore lost out -0.8%, and Copper was the star performer gaining 1.6%. China’s Politburo calls for stabilising of the property market. China vowed to strive for ‘best outcome’ for 2H Economic Growth. Biden spoke with Chinese President Xi Jinping as part of US efforts to deepen lines of communication, responsibly manage differences, and address issues of mutual interest. There was no mention of tariff reduction. The Chinese metropolis of Wuhan has shut down a district of almost a million people after detecting four asymptomatic Covid cases, as the original epicenter of the pandemic takes no chances in preventing another outbreak under China's stringent zero-Covid policy. Authorities in Wuhan's Jiangxia district, home to more than 970,000 people, announced Wednesday its main urban areas would enforce three days of "temporary control measures." Entertainment venues -- including bars, cinemas and internet cafes -- small clinics and agricultural product marketplaces were closed; restaurant dining and large gatherings, from performances to conferences, were suspended; all places of worship were shut and religious activities banned; while tutoring institutions and tourist attractions halted operations, according to a government statement. A quiet day ahead with a bank holiday on Monday in Australia, as traders will cast their eyes on the RBA rate decision scheduled for Tuesday which will have hefty market impacts.
USD
AUDUSD trades sideways this morning, having touched lows of 0.6950 before coming back up to trade at 0.6991 at time of writing. In US stocks, strong data yesterday with the Dow Jones gaining 1.0%, the S&P 500 gained 1.2% and the NASDAQ gained 1.1%. The US published the second quarter Gross Domestic Product, which showed that the economy entered a technical recession after contracting by 0.9% in the three months to June and following a 1.6% contraction in Q1. However, stock markets ignored the news. US indexes soared and reached fresh multi-week highs. Different US authorities diminished the relevance of the negative figure. Federal Reserve chief Jerome Powell anticipated it on Wednesday, saying that a disappointing GDP figure should be taken with a pinch of salt. US Treasury Secretary Janet Yellen said on Thursday that the Q2 contraction demonstrates the economy's move to more sustainable growth. Finally, President Joe Biden noted that Chair Powell and several other high-level banking executives claim that the US is not in a recession. Unemployment Claims printed at 256k marginally above expectations of 253k. US Treasury Secretary Janet Yellen spoke last night, stating that the US labor market is in full employment now, they have been able to reduce deficit, growth is slowing globally and inflation is still very high. Looking ahead this evening will be Core PCE Price Index m/m.
EUR
AUDEUR trades sideways this morning, having touched over 3-month-highs of 0.6890, before coming back down to trade at 0.6858 at time of writing. European equities closed higher with the DAX +0.9% and the CAC +1.3%. Germany’s inflation data flashed mixed signals as the Consumer Price Index (CPI) dropped to 7.5% YoY versus 7.6% prior but the Harmonised Index of Consumer Prices (HICP) climbed to 8.5% yearly, versus 8.2% prior in July. Additionally, the European Commission reported, "In July 2022, the Economic Sentiment Indicator (ESI) plummeted in both the EU (-4.2 points to 97.6) and the euro area (-4.5 points to 99.0), falling below its long-term average.” Other than the data, fears of economic slowdown in the old continent, due to the gas crisis, also probed the EUR. Looking ahead, the initial readings of German and Eurozone GDP for the second quarter (Q2) of 2022, as well as Eurozone Consumer Price Index (CPI) for July, will be important ahead of the Fed’s preferred inflation gauge, namely the Core Personal Consumption Expenditure (PCE) Price Index, for July.
GBP
AUDGBP opens lower this morning, having traded in a tight range of 0.5730-0.5760, trading at 0.5743 at time of writing. The FTSE was dead flat, posting at 0%. UK politics gain major attention as the first Conservative Party hustings favor Truss. The first of 12 political hustings for Conservative Party leadership didn’t go well in favor of Rishi Sunak as policymakers accused him of stabbing Boris Johnson in the back. On the other hand, Liz Truss gets an uncomfortable question on the monarchy, per Sky News. Furthermore, a survey from the British Chambers of Commerce (BCC) mentioned that a survey found that one quarter of 2600 exporters had suffered a fall in exports and another 46% reported no change, reported The Guardian. A quiet day ahead in the way of data, with Mortgage Approvals due out today, having a miniscule impact on markets.
NZD
AUDNZD trades lower this morning, having touched highs of 1.1179, before coming back down to trade at 1.1111 at time of writing. Yesterday, ANZ Business Confidence printed at -56.7 from a previous -62.6, however a quiet day in the way of data, with a bank holiday in New Zealand on Monday.