AUD Holds Gains, 4-Year Highs against the Pound
AUD
The Aussie Dollar has managed to extend on its recently rally against most majors, even if just marginally, as risk returns to markets and carries the Aussie to highs across the board barring the Kiwi Dollar. Asian equities were largely higher on the close, with the Nikkei the only underperformer down -0.65%. The ASX finished Thursdays session +1.1% in a broad move, following the US market, after US inflationary pressures eased. In local data, the Melbourne Institute’s (MI) Inflation Expectations release for July posted yesterday morning showed that Inflation Expectations fell to 5.9%, down from 6.3% in June, marking a second straight deceleration. This will likely result in a decline in the forward guidance from the RBA, which could likely weigh on the Aussie if inflation pressures stoop further. With no data on the docket to close the week off locally, markets will look ahead to a litany of Chinese data on Monday, as well as Monetary Policy Meeting Minutes and Unemployment later on.
USD
The AUD/USD refreshed yesterdays 2-month highs as more evidence of easing inflation data was released from the US, the pair trading at 0.7106 this morning. US Producer Price Index (PPI) came in lower than expected, with both the July MoM and YoY readings coming in below expectations. US PPI for July fell by -0.5% MoM, well below expectations of +0.2% with the YoY result at 9.8%, falling from 11.3% and coming in below expectations of 10.4%. The report lessened the prospects of the Fed upping interest rates by 75 basis point for the third time in a row at the conclusion of its September policy meeting. US Equities improved off the data however only managed to close either side of even with the NASDAQ closing -0.5%, the S&P 500 -0.1% while the Dow Jones was +0.1%. Also released were Weekly Jobless claims which increased by 14K, slightly lower than forecasts but not of major significance. A light-on calendar to end the week with only University of Michigan Consumer Sentiment Index released at midnight tonight the focus piece in North America.
EUR
The AUD/EUR touched highs not seen since mid-April as it traded up to 0.6894 before cooling off to trade at 0.6874 currently. European Equities were largely unchanged as the DAX remained steady with no change, whilst the CAC gained +0.3% at close. No major data to report on from Europe overnight, though there is a handful of mid-tier data expected this evening. The Eurozone will report the Industrial Production data, which is thought to be lower at 0.1%, down from 0.8% at prior release. Italian Trade Balance and French Finalised CPI numbers will cap the session off with another quiet week of data next week.
GBP
The AUD/GBP taking strides to climb to 4-year highs, the highest rate since January 2018, reaching 0.5831 and then settling to the current rate of 0.5821. Expectations for activity in Britain's housing market have dried up quickly thanks to a worsening economic outlook and rising interest rates, an industry survey showed on Thursday. The Royal Institution of Chartered Surveyors (RICS) said its gauge of sales expectations for the coming 12 months slid to -36% in July from June's -21%, the lowest reading since the onset of the COVID-19 pandemic in March 2020. The focus for currency markets today will be UK GDP growth for Q2, which be released this afternoon. It is anticipated to have slowed considerably to around +0.3% q/q (prev. +0.8%). High frequency indicators suggest growth in domestic demand has remained relatively sluggish, particularly in services.
NZD
The AUD/NZD is the only trading partner that is flat on the day, with the pair remaining within tight ranges to sit at 1.1039 this morning. In early data this morning, Food prices rose +2.1% in July 2022. After seasonal adjustment, they were up +1.1 percent, with fruit and vegetable prices leading the charge up +10% percent (up +3.1% after seasonal adjustment). Other data showed Kiwi Manufacturing PMI rose back into expansion for July, coming in at 52.7, from 50.0 previously. No real reaction to the data. Kiwi Services PMI will follow up on Monday morning, but no other data for now.