Aussie Job Numbers Declined in July
AUD
The AUD has seen a mixed 24 hours with a drop against most majors yesterday, before a recovering losses in the overnight session. The Australian Unemployment Rate yesterday came in better than expected, at 3.4% as opposed to the 3.5% prediction. However it was notable that most of the new jobs were part time only, and overall the economy actually had a net loss of 46k jobs with total hours worked also down. AUD was slightly off in the aftermath as you'd expect. Asian equities were lower on Thursday with both the Nikkei and Hang Seng falling 1%. The ASX closed down 0.21% after a day of mixed earnings releases and declines in blue chips. Commodities were mixed with Gold up 0.1%, Silver down 1.3%, the SGX Iron down 0.7%, CMX copper up 1.4%. There were headlines that Xi says China will insist on opening up. Hopefully bolstering Australian exports demanded by a more resource hungry Chinese economy. A relatively quiet day ahead with limited data of note on the radar. Next week we’re seeing Flash Manufacturing and Service PMI data out for Australia, which will give insight into how effective RBA’s interest rate hikes have been in curbing inflation.
USD
The AUDUSD meandered upward yesterday before losing all gains and opening lower this morning at 0.6911. USD strength was helped by US Unemployment Claims coming in better than expected, 250k instead of 265k. Adding to the good US data, The Philly Fed Manufacturing Index came in far better than expected at 6.2, instead of the expected -4.9. July existing home sales were worse than expected, falling by 5.9% to 4.81 mio instead of the expected 4.9% decline to 4.87 mio. American equities up slightly with the S&P500 up 0.2%, NASDAQ up 0.2%, & the Dow Jones up +0.1%. After a big week, we have a relatively quiet day ahead in terms of US macroeconomic data. Casting an eye to next week, and the US will release Flash Services and Manufacturing PMIs along which is the next major data.
EUR
The AUD recovered slightly against the Euro yesterday, gaining back about 40bps in the overnight session, landing at 0.6851 this morning. The weakening of the Euro is linked to the Eurozone final year on year CPI coming in exactly at expectation, at 8.9% and 0.1% for July m/m. Whilst being very high inflation figures, markets have interpreted this as signalling the ECB’s next rate hike will also be at expectation, currently pricing in 52.6bps worth of a hike. European equities were up with the EURO STOXX up 0.57%, and the DAX up 0.5%. The European current account data is being released at 6:00PM AEST, with experts currently expecting a -3.3B drop. Current Account data is generally more of an after the fact indicator of exchange rates rather than data that can be used to predict. Month on month German PPI is also out this afternoon, with markets currently predicting a 0.7% increase. Looking on to next week, markets need to look out for the French and German Manufacturing and Services PMI.
GBP
Last night saw the AUD recover roughly half of the losses it had made against the British Pound over the week, trading at lows of 0.5726, before rebounding strongly to 0.5793 this morning. British equities were up slightly with the FTSE gaining +0.4% in the last 24 hours. A study conducted by the University of York mentioned that estimates predict the 2/3 of UK households will enter "fuel poverty" by winter with a predicted 80% increase in energy costs. UK retail sales m/m are out this afternoon which will give a good indication of how consumers are reacting to inflation and recession in the British Isles.
NZD
AUDNZD continues to be rangebound, opening slightly higher at 1.1064 this morning. Kiwi Trade Balance data missed expectations heavily this morning, printing at -1092mio compared to an expected increase of 105mio. This could keep NZD on the backfoot into the week's close.