Nervous Markets Shedding Risk
AUD
The Aussie Dollar grinds lower over the weekend, lead by weak Chinese data on Friday, opening this morning lower against most majors despite strong commodity growth, with Gold up 3.1%, Silver up 3.8% Iron Ore flat and Copper down 0.5%. Asian equities closed in the red as risk appetite remained low with the imminent ground invasion of Gaza, the ASX and the Shanghai Comp both down 0.6%. On Friday the Chinese CPI y/y data showed consumer inflation actually slowed to a standstill, printing at 0.0% despite expectations of an increase to 0.2%. Chinese PPI y/y came in at -2.5%, which was slightly worse than expectations and Chinese New Loans came in lower at 2310B, expected at 2500B from a previous 1360B. This slew of negative Chinese data is painting a bleak picture, with less investment from new loans, and no inflation, the factors to stimulate the economy are lacking, pulling down the Australian dollar with it. Today there is no news released, with the next important piece coming out tomorrow with the Monetary Policy Meeting Minutes, giving insight into RBA Gov Bullock’s first rate decision.
USD
The AUDUSD continues to grind lower, with an unremarkable Friday trading session, with the pair temporarily breaking through the 0.63 handle on Saturday, opening this morning at 0.6304. Wall St remained soft into the close with the Nasdaq down 1.2%, the S&P 500 down 0.5% and the Down Jones up 0.1%. FOMC member Harker Spoke on Friday night, saying that the Fed is likely to be done with rate hikes, but supports the "higher for longer" stance, not knowing how long rates will have to remain elevated to curb persistent inflation There was also Prelim UoM Consumer Sentiment released, coming in lower at 63, with expectations at 67.2 and previous reading at 68.1. Prelim UoM Inflation Expectations increased from 3.2% to 3.8%. Tonight, we have Empire State Manufacturing Index looking to decrease from 1.9 to -6.4, followed up by FOMC Member Harker speaking again.
EUR
The AUDEUR sat in a tight range on Friday and over the weekend, opening slightly lower this morning at 0.5988. The European equities closed in the red, with the CAC down 1.4% and the DAX down 1.5%. To the news, ECB President Lagarde spoke over the weekend, taking about how the core inflation in the eurozone is still elevated, mentioning wage growth being historically high, contributing to the sticky inflation particularly for services. Tonight, we have the Eurozone’s Trade Balance to be released, expecting a growth from 2.8B to 5.4B.
GBP
The AUDGBP pair also traded a tight range leading into the weekend, opening this morning slightly down at 0.5192. The UK equities followed the global trend and were red into the close, with the FTSE down 0.6%. BOE Gov Bailey spoke twice since Friday morning, however neither speech offered any new news to affect the market. On his Friday afternoon speech, he talked about how future rate decisions will be close calls, and although there is much to do, he said he is happy with the progress. On his Sunday speech he spoke around how the workforce dropout was keeping inflation elevated, and how sluggish business investment was also adding to inflationary pressures. There is no relevant news until tomorrow, where there is Claimant Count Change, looking to increase from 0.9k to 2.3k.
NZD
The AUDNZD finds small gains over the Friday session, opening at 1.0675 this morning. There was no data out on Friday or over the weekend, however BusinesNZ Services Index is already out this morning, coming in higher at 50.7, previously at 47.1. The main piece of data this week for NZ will be the CPI q/q coming out tomorrow morning, expected to increase from 1.1% to 1.9%.