Fresh US Inflation Data Due Tonight
AUD
AUD continues a strong start to the week, recouping some of last week's losses and making the most of an upbeat mood in markets. Asian equities opened the week higher with the Hang Seng rising 2.7% and Nikkei up 1%. The ASX climbed 1% on Monday with all 11 sectors rising and materials with the greatest advance. There was a mixed performance for Commodities on close as Gold and Silver were in the red, Iron Ore on the other hand 0.6% in the green. No data came out on the economic front yesterday however today we will be keenly watching the labor cost measure in the NAB survey, which had surged higher in recent months, for any signs that RBA Governor Lowe’s rhetoric on wages growth is too relaxed.
USD
AUDUSD continued its rally yesterday, briefly flirting with the 0.69 handle overnight before opening this morning at 0.6891. US equities traded firmly to start the week with the NASDAQ + 1.2%, the S&P 500 +1% and the Dow Jones +0.6%. US yields edged fractionally higher ahead of this evening’s key inflation release while crude oil also advanced to close at $88 a barrel. No data last night, however a busy week for the United States on an economic front with important US CPI inflation for August to be released tonight. The 13% decline in average gasoline prices in August should provide relief to headline inflation, however measures of underlying inflation such as core CPI and the median CPI should be firmer, but may receive some relief from a decline in used car prices. The Fed will be paying close attention to the inflation numbers which will help guide the pace and magnitude of upcoming interest rate hikes, their next meeting is in just over one week's time.
EUR
AUDEUR seesawed yesterday, dipping to lows of 0.6745 before reclaiming all losses and opening basically flat at 0.6803 this morning. European equities closed higher with the DAX up 0.7% in keeping with the generally positive movements in global equities. The ECB’s Vice-President Guindos said their 75bp hike aims to anchor inflation expectations before adding that higher rates may also weigh on economic growth. Guindos also mentioned that monetary policy should aim to ease the energy shock and any GDP contraction will be less than in the Euro crisis. News that Ukrainian forces retook some key areas in the Kharkiv region has caused more unease between the already shattered relationship between Russia and the rest of Europe. The Kremlin said the Ukraine ‘Operation’ is to continue until goals are met and it sees no prospects for talks with Ukraine now with the comments coming after Ukraine made significant territorial gains over the weekend. Today we have a string of lower tier data coming out of the Eurozone, most likely not having an impact on the strength of the EURO dollar.
GBP
AUDGBP was flat overnight in lacklustre trade, looking for direction this morning at 0.5896 at time of writing. The FTSE 100 rose 0.5% on close as a raft of economic data was released. The main piece was UK GDP for July, which was +0.2% MoM, falling short of expectations of 0.3% with weaker than expected numbers from Industrial Production and Manufacturing Production in addition. Despite this AUDGBP did not react too much and stayed stagnant against its lower-than-expected economic forecasts. Today we have a string of lower tier data ahead of tomorrow's yearly CPI inflation data forecasted at a whopping 10%.
NZD
AUDNZD is rolling higher this morning opening at 1.1220 which is 2 week highs. On an economic front there has been a lack of fundamental news coming out of NZD for the past 2 week. This morning's Food Price Index showed and increase of 1.1% (prior was 2.1%) in what is the only data release for the day.