Greenback Pushes On
AUD
The Aussie Dollar opens largely down against the majors as USD strength continues to grip global currency markets. The ASX closed Tuesday’s session up +0.4%, led by a rally in the materials sector, while Asian equities finished the session largely higher, with the Shanghai Comp up +1.4%, the Nikkei up +0.5%. The Hang Seng underperforming its peers down -0.2%. No domestic data yesterday with little to look out for today. Commodities offered no real entertainment with Iron Ore, Copper and Gold steady on the day. Retail Sales for August will be released today, with markets expecting a minor increase of +0.1% m/m. Perhaps the RBA will consider reduced spending when deliberating the next rate hike’s size.
USD
The AUDUSD opened by refreshing 2-year lows of 0.6431 after tickling 0.6413 overnight as the Greenbacks dominance seems unending. A mixed session on Wall St with the NASDAQ closing +0.3% higher while the Dow Jones and S&P 500 closed -0.4% and -0.2% lower. Fed Speaker Evans spoke and acknowledged restrictive financial conditions are needed to curb inflation, with 100 to 125 basis points worth of interest rate hikes currently priced in by the end of the year. In US data, Durable Goods for August printed at -0.2% to come in slightly better than expectations of -0.3% with the core measure matching expectations at +0.2%. The second round of US data saw Consumer Confidence for September printed at 108.0, up from 106.3 and exceeding expectations of 104.5. August New Home Sales rose 28.8% to 658k to substantially beat expectations of a 2.2% decline. To the day ahead, Goods Trade Balance and Preliminary Wholesale Inventories (m/m) are due this evening, although these typically don’t move markets.
EUR
The AUD/EUR giving back further gains to just hold onto the 0.67 handle, trading at 0.6701 currently. European equities were higher on the open with the Eurostoxx 50 up +1.6% and FTSE100 up +0.8%. The M3 Money Supply (y/y) came in at +6.1%, exceeding expectations of 5.4%, while Private Loans (y/y) hit bang on expectations of +4.5%. Multiple leaks in Russia’s Nordstream gas pipeline in the Baltic Sea raise woes that the Eurozone’s energy supply problems are likely to be permanent. The same intensify fears of recession inside the bloc, especially amid an absence of impressive data and inflation fears. Russia’s Chairman of the Security Council Medvedev hit the wires saying Russia has the right to use nuclear weapons if necessary, while the controversial Ukraine referendum data indicates at least 96% support for joining the Russian Federation, as reported by the Russian Federation. To the day ahead, German Consumer Climate data is expected in at a bleak -38.9 in the midst of drastically increased energy prices and weakening economic conditions. If on expectations, this figure would be the gloomiest in over a decade. The ECB’s Lagarde is also expected to participate in a fireside chat at the Frankfurt Forum on US-European GeoEconomics.
GBP
The AUD/GBP continues to ease back from the heights seen earlier this week, trading at 0.6001 right now. MPC member Pill stated the significant repricing of financial assets has further challenged inflation targeting efforts. He noted the BoE would not sell Gilts into a dysfunctional market, though quantitative tightening could continue in orderly market. He also said the BoE is ready to make ‘unpopular decisions’ if necessary. This morning, BRC Shop Price Index (y/y) came in at +5.1%, being the highest figure in over a decade, and reflects the change in price of goods at retail stores. MPC Member Cunliffe is also due to speak at the Association of Financial Markets in Europe’s Operations, Post-Trade, Technology and Innovation Conference in London.
NZD
The AUDNZD the only pair managing to remain unchanged at this morning's open, sitting at 1.1426. No data yesterday as eyes look to today’s ANZ Business Confidence survey, being a leading indicator of economic health. The major event this week will be RBNZ’s Governor Orr’s talk at a conference on Thursday evening: ‘Maintaining Central Bank Independence in the Face of Fiscal Dominance Risks, Expanding Central Bank Mandates, and Other Challenges.’