AUD Supported by Improved Chinese Data
AUD
The Aussie dollar is mixed, though the AUD was largely bolstered by upbeat Chinese data and improvement in Australia’s consumer sentiment. Asian equities finished largely in the red with the Nikkei outperforming up +1.2%. The ASX closed Tuesday’s session flat with gains offset by a fall in Utilities and Materials stocks. China’s GDP was the headline piece from Asia yesterday, beating expectations of 1.6%, at 2.9% for Q4. The annual based GDP data, came in at 3%, well below the Communist Party’s 5% projection, and trailed 2021 by 8.1%. Also of note from China were the Yearly Retail Sales and Monthly Unemployment rate, which posted at -1.8% (-9.5% expected) and 5.5% (5.8% expected) respectively. Westpac’s Consumer Sentiment Index showed that consumer confidence jumped 5% in January, the largest monthly gain since April 2021, aided by a temporary respite from interest-rate increase as the Reserve Bank’s board doesn’t meet this month. The next piece of Aussie data will be tomorrow’s jobs data at 11:30am. It’s worth including that implied volatility rose sharply overnight ahead of the Bank of Japan’s interest rate policy meeting at a tentative point today.
USD
The AUD/USD reached a high of 0.6997 before edging back off to trade at 0.6985 currently, the Aussie boosted by the aforementioned Asian data. Wall Street was mixed starting off the US working week, the Dow Jones trading -1%, the NASDAQ +0.3% and the S&P 500 flat by close of trade. US Empire Manufacturing for January fell to the lowest level since May 2020 at -32.9, down from -11.2 and worse than expectations of -8.6. Headline data from the US overnight tonight will be monthly Producer Price Inflation alongside monthly Retail Sales, adding to the potential for volatility today. Also released will be the Beige Book, NAHB Housing Market Index, and Business Inventories.
EUR
The AUD/EUR broke out of this week's ranges to trade at highs of 0.6480 before settling at 0.6475 as some sheepish comments from ECB speakers aided the Aussie. The comments helped European Equities to take minor gains, the DAX and CAC gaining +0.3% and +0.5% respectively. The ECB’s Lane said “it is still safe to bring interest rates above where they are now, with risks not yet being two-sided”. He added that the Euro-area economic situation is more complicated than in the US, and a focus on a 2% inflation target is the best strategy. More headlines tipped that the ECB was looking at a 50bp hike in February before reverting to a 25bp move in March. Some positive data from Germany, which showed ZEW Investor Expectations survey rose to 16.9 in January (-15.0 expected), a huge beat on expectations. Some lesser tiered data released tonight, Finalised CPI numbers and Italian Trade Balance due in the evening.
GBP
The AUD/GBP rose to a weekly high of 0.5720 before tumbling below yesterday's open and trading at 0.5680, off the back of a resolute jobs report yesterday. The UK reported that Average Earnings, both including and excluding bonuses, climbed 6.4% in the September-to-November period. Furthermore, the number of people claiming Unemployment-related benefits fell to 19.7K in December from 30.5K previous and the jobless rate held steady at 3.7%, close to its lowest level in almost 50 years. The United Kingdom will release the Consumer Price Index (CPI) data this evening. Headline is expected at 10.5% year-on-year vs. 10.7% in November while Core Inflation is likely to accelerate to 6.6% vs. 6.3% booked in November. If so, Headline would decelerate for the second straight month from the 11.1% peak in October but would remain far above the 2% target.
NZD
The AUD/NZD continues to give back earlier gains despite a lack of meaningful data out of New Zealand, currently trading at 1.0866. NZ’s GDT Price Index decreased by -0.1% for the last fortnight. No other data to report on for the minute.