RBA to Raise Interest Rates Again Tomorrow
AUD
The AUD had mixed levels of success leading into the weekend in what were volatile trading conditions, a sour risk mood making it tough for the AUD in places. Asian equities closed flat on Friday, with the ASX being singled out being down -0.2% as 10 of the 11 sectors are in the red. Commodities have closed mostly in the green with Gold and Silver leading by 1.0% and 1.5% and Copper and Crude Oil being up slightly by 0.2% and 0.3% respectively with Iron Ore lacking, closing flat and Natural Gas being down significantly at -15.4%. Risk sentiment took a hit on the weekend when reports surfaced that Europe and the US were planning to place a price cap on Russian oil, comments that were quickly refuted by the Russians. To the data today, and we have a slew of lower tiered data scattered throughout today the MI Inflation Gauge m/m and Retail Sales being the most notable. With the US on a bank holiday, don't expect fireworks today, however tomorrow's RBA Cash rate decision will be interesting with most commentators expecting a further 50bps rate hike, futures markets currently pricing in 41.6bps worth of a hike.
USD
The AUDUSD opens flat this morning despite a weaker job employment outlook from the US which only temporarily strengthened the AUD, peaking at 0.6855 before retracing back down to current levels of 0.6795. The Non-Farm Employment change on Friday night was 315K+ where expectations were for 295k+ new jobs created in the US. However, Average Hourly Earnings m/m and the Unemployment Rate reported at 0.3% and 3.7% respectively both fell short of expectations. CNN reported that there were 2 jobs available for every single unemployed person in the US. Wall St equities have continued to fall on Friday, with the S&P500 and DOW down -1.1% and the NASDAQ down -1.3%. No data due for release today with the US enjoying the Labor Day holiday. The data kicks off tomorrow night with Services PMIs and Jerome Powell will be on the wires on Thursday night.
EUR
The AUD opens higher at 0.6846 this morning, with the EUR struggling amid energy price concerns and mixed data released on Friday. Spanish Unemployment which is notoriously high reported a loss of 40.4k jobs versus an expected 4.6k, however European PPI m/m beat expectations, reporting at 4.0% compared to expected 2.5% and a German Trade Balance also better than expectations. EURUSD fell back below parity after a brief resurgence, now trading at 0.9910 in what is a worrisome sign for the single currency. Despite a weak EUR, equities were up significantly with the DAX up 3.3% and the CAC up 2.2% on the day. Looking onto the day ahead, numerous Services PMI data is being released from Spain, Italy, French, German and the EZ as a whole. Additionally, Sentix Investor Confidence and Retail Sales m/m is also released. IN what is a massive week for European data, the ECB make their interest rate decision on Thursday night, markets expecting a further 50bps rate hike.
GBP
The AUDGBP opens stronger this morning, reclaiming the 59 handle and trading a 1 week highs of 0.5916 at time of writing. Recent Pound weakness continues to linger as winter approaches and fears over forced manufacturing industry shutdowns loom large with the energy crisis biting hard. UK equities however closed up on Friday, the FTSE closing at 1.9%. Across this week, the UK is light on data. Today, Final Services PMI are expected to release at an expansionary rate at 52.5 with the most significant data release being the Monetary Policy Report Hearing being released on Wednesday.
NZD
The AUDNZD is opens slightly down from Fridays open at 1.1155, starting to move away from the 1.1254 high it had made last week. No data had been released on Friday to give the Kiwi any support, however looking onto today, ANZ Commodity Prices m/m is being released. Also light on significant data this week, GDT Price Index is released on Wednesday and Manufacturing Sales q/q on Thursday.