Volatile Conditions Persist for AUD
AUD
After a tough trading session yesterday, the AUD found some respite in the overnight session on the back of improved risk sentiment. Yesterday we had strong Retail Sales m/m data, coming in 1% over expectation at 1.3%, showing consumers are done-for yet. Mixed results in commodity markets saw Crude Oil up 4.2%, Gold and Silver finished flat and IRON ORE fell 0.6%. Asian equities were lower following Friday's bloodbath in US equities, with the Nikkei falling 2.7% and Hang Seng down 0.7%. The ASX fell 2% in a broad sell-off with all 11 sectors moving lower. Looking to the day ahead, we will watch out for the Private Sector Houses m/m as well as the updates for Q2 construction are due today.
USD
US strength continued in yesterday's session, driving AUD lower to 6 week lows at 0.6841, before risk sentiment improved in the overnight session allowing AUD to open at a more respectable 0.6901 this morning. AUDUSD continues to trade on the notions of risk sentiment, with a greater than 1% range yesterday. US Equities were down across the board with the S&P 500 -0.7%, NASDAQ -1.0%, and DOW JONES -0.6%. In the early hours of the morning FOMC Member Brainard Spoke, which was not of much consequence. US data to look out for tonight includes CB Consumer Confidence which is expected to improve and the JOLTS Job Openings which is expected to decline. FOMC Member Williams also speaks tonight in an environment where market watchers are highly attuned to clues on rate hikes.
EUR
The Aussie Euro pair opened slightly down at 0.6896, having dipped as low as 0.6869 last night. European equities were largely lower on the open with the CAC 40 down 1.3% and Euro Stoxx 50 -1.3%. ECB’s Lane spoke last night with dovish commentary played down the chances of a 75bp move, and that September would mark the start of a new policy phase though stressed that a “steady pace of rate hikes was required to close the gap to the terminal rate and that smaller rate hikes were less likely to bring adverse effects”. EUR didn't like the lack of enthusiasm around rate hikes and AUD started to recover. Looking to the day ahead, we have the Spanish Flash CPI y/y which is priced in at 10.7% but most importantly we have the German Prelim CPI m/m which is expected at 0.3%, down from a previous result of 0.9%. Any divergence from expectation in the German CPI has potential to to influence EUR movements tonight.
GBP
The AUDGBP traded solidly, beginning to move back towards those 5-year highs we saw last week opening up at 0.5892 today. Not much happened last night in terms of UK data due to the bank holiday. The FTSE followed the trend of most global equity markets at -0.7%. Looking to the day ahead, some minor data coming out of Great Britain with the M4 Money Supply m/m, Mortgage Approvals, and Net Lending to Individuals m/m.
NZD
The AUDNZD pair opened slightly down this morning at 1.1210, having traded a tight range as risk sentiment buffets both currencies in a similar fashion. The NZX 50 also followed the trend of global equities falling 0.87% its lowest close since July 29th. The only piece of economic data from NZ for the week is due tomorrow in the form of ANZ Business Confidence.