Hot CPI Suggests Cup Day Hike

AUD

The Aussie dollar opens lower against the majors this morning, despite yesterday’s rally in response to Australia’s higher than expected CPI data. Our CPI q/q printed 0.1% higher than expected and our CPI y/y printed 0.3% higher than expected at 5.6% This higher inflation data means that a rate hike from the RBA is looking a lot more likely in the next meeting on Melbourne Cup Day. The ASX closed a touch lower as Materials rallied 1.6% while Real Estate extended its losses for the week, down another 2%. RBA Governor Bullock spoke at 9am this morning stating that “CPI Was a Little Higher Than We Expected” but she declined to say if this made a rate hike more likely.

USD

AUDUSD opens at 0.6289 today, after having traded to highs of 0.6400 yesterday after Australia’s CPI data. It was a tough night for Wall St. with the S&P500 retreating 1.5% and Nasdaq down 2.3% on earnings concerns. Fed Chair Powell spoke early this morning but did not comment on monetary policy or economic outlook. US New Home Sales for September rose 12.3% to 759k, beating estimates of a 0.7% increase to 680k however there was little reaction to the data. A big 24h ahead for the USD with Advance GDP q/q and Unemployment Claims the main focus. We'll also see Durable Goods Orders, Pending Home Sales and FOMC Member Waller speak.

EUR

AUDEUR lost ground overnight to open up at 0.5953, down from yesterday’s high of 0.6037 following Australia’s CPI print. European markets closed last night with modest gains with the CAC ending the day up 0.3% while the DAX closed up 0.1%. The German IFO Business Climate survey came in better-than-expected last night at 86.9, showing that German companies are somewhat more satisfied with the current business situation and managers are also less pessimistic about the coming months. The ECB meets today, and it is widely expected to leave its policy rate unchanged at 4.5%. The previous ECB statement included an important shift in communication that provided a strong indication that the Governing Council thinks this tightening cycle has probably come to an end.

GBP

AUDGBP opens lower today at 0.5196, having spiked at 5258 yesterday following Australia’s better than expected CPI print. The FTSE ended its day with some modest gains of 0.3%. It’s been very quiet on the data front for the British, with no high-impact news coming out in the past 24 hours and nothing new until next week’s Bank of England’s Official Bank Rate and monetary policy reports.

NZD

AUDNZD follows the trend opening down 1.0863, with a midday spike yesterday at 1.0915 following the Aussie CPI print. No major pieces of data were out yesterday and there’s no data until the RBNZ's Statement of Intent on Friday (this is a 1-y budget & 3-y objectives statement).