Aussie Consumer Inflation Due at 11.30am This Morning

AUD

Overarching risk on environment allows the Aussie dollar to hold steady against the majors despite some stronger foreign data, with the AUD opening slightly higher this morning against the major currency pairs. Asian equities closed higher with ASX +0.4%, Shanghai Comp +0.8% and Nikkei +1.5%. Commodities were mixed with Crude Oil -1.8%, Natural Gas -11.4%, Gold +0.2%, Silver +0.4% and Iron Ore-1.4%.  Yesterday we saw Aussie Flash Manufacturing PMI become contractionary for the first time since June 2020, dropping 0.4 from previous readings coming in at 49.8. On the other hand, Flash Services PMI saw a slight improvement, moving from a previous 47.3 coming in at 48.3 (although still contractionary). Today's local CPI data is due for release at 11.30am which should prove pivotal to the size and number of rate hikes delivered by the RBA this year. Markets expect the yearly number to actually tick higher to 7.6% with the number for Q4 '22 to dip lower to 1.6% which could indicate that the yearly number is starting to top out. A stronger than expected CPI print today should be AUD positive.

USD

Stronger than expected US PMI data overnight initially saw the AUDUSD dip to lows of 0.6993, however it wasn't enough to stop the risk-on train which drove the rate upwards to a high of 0.7058, and opening this morning at 0.7045. The data showed Manufacturing PMI for January printed at 46.8, up from 46.2 and better than estimates of 46.0 with Services PMI at 46.6, up from 44.7 and above estimates of 45.0. Also release overnight was the Richmond Manufacturing Index which missed market expectation of -5 coming in at -11. US Equites were mixed on close with the Dow Jones +0.4%, NASDAQ -0.1% and the S&P 500 flat. A quieter day ahead with only the Crude Oil Inventories being released tonight. All eyes on today's local CPI print at 11.30am.

EUR

Despite a slew of mixed data out of the Eurozone last night, the general risk on environment allowed the Aussie dollar to continue pushing forward, seeing highs of 0.6490 after somewhat dipping this morning, but still opening slightly up at 0.6470. European equities were mixed on close with DAX -0.1% and CAC +0.3%. Last night we saw French and German Flash Manufacturing and Services PMI’s all coming in mixed relative to market expectations. Similarly, we saw mixed results for the Eurozone’s Flash Manufacturing & Services PMIs. A softer day for the Eurozone with only the German ifo Business Climate data being released tonight.

GBP

The AUDGBP reclaimed the 57 handle overnight, reaching highs of 0.5730 before opening at 5710 this morning. The FTSE closed slightly lower, dropping 0.1%. Last night we saw a Public Sector Net Borrowing miss after coming in at 26.6B. We also saw CBI Industrial Order Expectations miss coming in at -17 after markets pencilled in -7. More importantly we saw the release of the Flash Manufacturing and Services PMI’s which remained contractionary, the Manufacturing PMI beat expectations of 45.4 coming in at 46.7. However, the Services PMI missed by 1.6 coming at 48. Tonight, we will see the release of the PPI Input and PPI Output m/m, both expected to drop compared to previous readings.

NZD

The AUDNZD opens slightly higher this morning after seeing a range of about 45 points in the overnight session. Last night we saw the release of the BusinessNZ Services Index which saw a drop of 1.7 coming in at 52.1. More importantly this morning we saw NZ CPI q/q beat market expectations for the third consecutive time coming in at 1.4%, and in what will be pleasing to the RBNZ, far lower than the previous quarter's reading of 2.2%. Later today we will also see Credit Card Spending y/y.