Aussie Consumer Inflation Data Due Today
AUD
The Aussie Dollar is generally down against its counterparts, with most pairs retracing recent gains even in subdued market conditions with limited data for participants to scour. Asian equities were mixed on the close with the Nikkei up +0.8% and Hang Seng down -0.3%. The ASX finished Tuesday’s session down -0.3% with Material stocks leading the fall down -0.55%. The focus will be on Australian Inflation numbers with its newly minted monthly CPI estimate released at 11:30am this morning. Australian Non-Seasonally Adjusted CPI dropped to 6.9% in October, down from 7.3% a month earlier. The markets are bracing for inflation to rise again, with a forecast of 7.2% for December. As well, the trimmed mean rate (core CPI) is also expected to rise to 5.5%, up from 5.3%. Also of importance will be Retail Sales M/M, which are expected to have rebounded in Nov (+0.7% MoM) after falling modestly in Oct. High-frequency card spending data suggests goods spending strengthened in Nov. Part of the weakness in Oct, particularly in department store sales, is likely to have been because consumers were waiting for Black Friday and other sale events in Nov.
USD
The AUD/USD took some minor losses, losing out on the 0.69 handle to fall as low as 0.6861 before stabilizing at 0.6892. There was an optimistic session on Wall St which saw the NASDAQ trading +0.6%, the S&P 500 +0.3% and the Dow Jones +0.2% at close of trade. Limited data from the US, with Fed chatter taking the spotlight. Fed’s Bowman on the wires saying that continued rate rises were needed to curb inflation and that rates should be kept at their peak for some time. Jerome Powell also spoke at a Climate Change event but did not address the US economic outlook or monetary policy. The only minor piece of data was final Wholesale Inventories, which rose by 1.0% in November, unchanged from the initial reading as expected and did not garner a reaction. The slow start to the week continues with just 10-y Bond Auction and Crude Oil Inventories set for release tonight.
EUR
The AUD/EUR fell from yesterday's high of 0.6442 down to 0.6417 even with varying outlooks from ECB speakers still favouring the EUR overnight. ECB’s Schnabel hit the news saying monetary policy must turn restrictive to fight inflation with rates still needing to rise significantly. ECB Council Member Centeno conversely commented saying that the current process of interest rate increases is approaching its end, adding that “even though inflation may have some resistance in January and February, it will resume falling in March.” European Equity markets remained heavy in late trade and generally closed the session with modest losses, -0.1% for the DAX and -0.6% for the CAC. Italian Retail Sales m/m will be released for November tonight, with the forecast -0.3% likely a slowdown ahead of the busier Christmas reporting period.
GBP
The AUD/GBP held relatively steady, with no move to favour buyers or sellers, continuing trade at 0.5657. Only some lesser-tiered data from the UK overnight, with BRC Retail Sales Monitor coming in stronger than expected, even with expectations of a Christmas boost. The figure posted at 6.5%, exceeding 2.4% forecasts. Concerns about the health of the UK economy remain intact, with fundamentals on debate at the Bank of England’s Monetary Policy Committee. The main note of importance remains to be growth numbers on Friday evening, remaining quiet until then.
NZD
The AUD/NZD gave back some of its recent gains, falling to 1.0829 this morning. It's been radio-silence from New Zealand with no data yesterday and only ANZ Commodity Prices m/m released later this morning, which typically won't sway markets.