AUD Steadies with Friday's Strong Chinese Data Dump
AUD
The Aussie dollar bounced against the majors, moving back up into more familiar trading ranges as the safe haven strength of the USD finally stabilizes. Local Equities fell on Friday with the Hang Seng closing down 0.9%, the Nikkei 1.1% lower and The ASX losing 1.5%. While the Shanghai Comp fared the worst, down 2.3%. While Equities suffered local commodities gained with Gold up 0.6% and Iron Ore gaining firmer up 1.6%. Chinese News was positive, with a number of data releases above expectations, with Retail Sales y/y printing 5.4% well above expected 3.2% and previous of 2.7%, the Unemployment Rate also quite positive falling from 5.4% to 5.3%, while Fixed Asset Investment and Industrial Production also came in stronger than expected. It is a quiet week ahead for local macro-economic data apart from tomorrow's Monetary Policy Meeting Minutes.
USD
The Aussie has gained against the Greenback clawing back into the 67s, currently trading at 0.6729 at time of writing after having rebounded from 2 1/2 year lows of 0.6670 late into Friday night. Rates not seen since June 2020. This bounce can be attributed to a combination of firm commodities, positive Chinese data and last week’s US safe haven rally finally stabilizing. In US Equities Wall St rounded out its worst week since June and its third consecutive negative week with the NASDAQ closing -0.9%, the S&P 500 -0.7% and the Dow Jones -0.5% in Friday trade. Saturday, we observed the release of the Prelim UoM Consumer Sentiment at 59.5 just shy from expectations of, but still firmer than previous of 58.2. Prelim UoM Inflation Expectations also printed quite stable at 4.6% while TIC Long-Term Purchases missed significantly at 21.4B against expected 121.6B. Looking ahead on Wednesday we will get the US FOMC rate decision, markets already pricing in a hike of 75bp. Also of interest will be the accompanying dot plot projection, which most pundits are expecting to lean in a hawkish direction.
EUR
The AUDEUR pair sees some steady gains, once more ascending into 67 territory currently trading at 0.6714. European equities closed the session lower with the DAX losing 1.7% with the CAC following closely behind, down 1.3%. Friday afternoon's Eurozone data met expectations having no significant impact on the pair, with Final and Core CPI y/y flat at 9.1% and 4.3% respectively. From the ECB we heard some chatter as Guindos hit the wires saying they are watching the exchange rate very carefully and that they hope the recent depreciation trend will be reversed soon. We then heard from ECB’s Rehn, saying the risks to the inflation outlook are primarily on the upside. Lagarde then commented that the hikes should send a signal that the ECB will meet its price goal. Headlines coming from Russian President Putin who said that Ukraine was being used as a tool to break up Russia and that preventing this was the main goal of the “special military operation”. He also claimed the main goal was to “liberate” the whole of Donbas. Not too much out of the Zone for today other than the German Buba Monthly Report set for a tentative release sometime throughout the day. Looking ahead, not too much of great significance with the big-ticket items awaiting on the back end of the week with PMI figures set for release Friday.
GBP
The Aussie Dollar has made some solid gains against the Pound Sterling throughout the weekend currently trading at 0.5884 at time of writing. In UK Equities much like other bourses was in the red, with the FTSE losing 0.6%. This AUDGBP upside may be attributed to a weak Pound rather than AUD strength, which coincided with the market downgrading the likelihood of a 75 bps hike from the BoE later this week. The swaps market wagers on a 75bp hike peaked at about 82% on September 5 and were still near 70% as recently as September 14. However, it fell to around 15% before the weekend. Friday afternoon's UK Retail Sales m/m printed significantly lower than expectation at -1.6% vs predicted -0.5% and previous of 0.4%. The week starts with a bank holiday in the UK, and looking ahead, eyes are fixed on Thursday night's BoE Bank Rate decision which will most definitely be an influential one.
NZD
The Aussie trades slightly down against the NZD today, currently 1.1218 at time of writing as both currencies ride the same waves of risk sentiment. This morning BusinessNZ Services Index printed 58.6 above previous of 54.4, but the more important item of the day will be Governor Orr hitting the wires at 1pm at the Climate Change Business Conference, in Auckland.