US Rate Hike Expectations Boosting USD
AUD
The Australian Dollar is trading at either ends this morning after having a mixed trading performance overnight. Asian Equities were lower on Wednesday with the Shanghai Comp losing -1.4% on the close, while the Nikkei dipped -0.9%. The Australian Share Market broke the four-day winning streak amid a confidence plunge with the ASX 200 down sharply, falling -0.9%. Commodities were relatively subdued throughout the session with Silver and Gold making little results, while Iron Ore gained +0.8%. The AUD found some support throughout the session yesterday as upbeat domestic data provided some temporary distraction from global risk. Australian Retail Sales surprised with a strong increase of +0.9% in May, topping forecasts of a 0.4% gain. The fresh insight into the consumer may encourage the RBA to have more confidence that consumers can handle higher interest rates as it prepares for another likely hike at its July meeting next week. To the day ahead, both the Manufacturing PMI and Services PMI are released for China, a positive result is forecasted as the demand side could see improvement with logistics disruptions easing since May.
USD
AUDUSD bears were back in town overnight as the pair fell under pressure into Wednesday evening, dipping to as low as 0.6860 before trading at 0.6883 this morning. US Equities ended heavily in the red overnight as investors focused on remarks by central bankers, The Dow Jones fell -1.6%, the S&P 500 fell 2% and the Nasdaq dropped -3%. All three posted their worst daily declines since June 16th. In the event overnight, US Q1 GDP was revised down to -1.6% from a flash reading of -1.5% while Personal Consumption was revised down to 1.8om 3.1%. Core PCE however was revised up to 5.2% from 5.1%. Across this event, FED Chair Powell crossed the wires, focusing on inflation and the strength of the US economy, stating he would allow the FED to raise rates to the level required to bring inflation back down to 2%. He noted there would be pain from the process but the pain of not getting inflation back to target would be worse. Looking ahead, there’s a flurry of economic data on the horizon with the US docket featuring Core PCE Price Index, Unemployment Claims, US Personal Income and Spending data.
EUR
AUDEUR had quite a turbulent session throughout Wednesday evening with the pair posting lows of 0.6528 before coming back to trade at 0.6586 at the time of writing. European Equity markets remained heavy at the close with the German DAX down more than -1.7%, though the French CAC shed -0.9%. Into the data overnight, Eurozone Consumer Confidence remained static at -23.6 for June while preliminary readings Germanys CPI eased to 8.2% YoY versus the 8.8% expected. More importantly, ECB President Lagarde crossing the wires at the recent economic forum overnight, signalling chances of a heavier rate increase in September while also expecting positive growth rates. Looking forward, it’s a busier economic calendar with German Retail Sales, French CPI as well as the Eurozone Unemployment data being among the key releases.
GBP
AUDGBP traded with mixed results overnight, dipping to as low as 0.5640 and managed to regain some traction to trade at a gain at 0.5672 this morning. The FTSE 100 retreated from two-week highs as growing concerns about a global recession weighed on. The London Benchmark down -0.25%, while the FTSE 250 fell -1.6%. There’s was little macroeconomic data to report on overnight with pessimistic commentary from the BoE Governor Bailey weakening the Stirling only slightly. As per the commentary, Bank of England Governor Andrew Bailey sounded cautious and noted that there were clear signs that the economy is slowing. "We are being hit by a very large real income shock," Bailey added further. Going forward, investors will focus on the release of the UK GDP numbers this evening. As per the market consensus, the UK is seen stable at 8.7% and 0.8% on an annual and quarterly basis.
NZD
AUDNZD was down this morning after trading lower into the session on Wednesday, still managing to hold on from the recent weekly gains as we trade at a rate of 1.1045 this morning. As little economic data gets released, the present AUDNZD drivers are global risk sentiment, and mainly, the US dollar. During the next 24 hours, we get some macroeconomic releases with Chinese PMIs to be the headline release followed by local ANZ business confidence reports.