Retail Sales Set to Impact RBA Decision

AUD

The Aussie dollar opens slightly stronger relative to Friday’s open, while Asian equities pushed higher with the Nikkei adding 1.3% and Hang Seng up a strong 2%. The ASX gained 0.2%. Today’s focus will be our domestic Retail Sales print, expected to rise +0.3% in September following the +0.2% bump in August. The figure is likely to contribute to the RBA’s interest rate decision next Tuesday. Notably, last week’s hot CPI print added weight to the argument for a 25bps hike to 4.35%, although markets and economists are largely undecided on what will happen.

USD

After reaching 0.6369 highs on Friday evening, AUDUSD opens today at 0.6341. Wall St. finished mixed to wrap up a poor week, with the Nasdaq up 0.4%, Dow -1.1% and S&P500 -0.5% (now 10% off its July peak). As expected, the US Core PCE Price Index gained +0.3% for the month, reflecting somewhat sticky inflation, although not adding much support for another Fed interest rate hike (the rate is expected to be held at 5.5% this Thursday). Concerns are now intensifying surrounding real household disposable income (the major driver of consumer spending) which, if on its current trajectory, would start to make a recession seem more likely & inflation could fall faster than the Fed expects. Dry on the data front today, while tomorrow evening will bring CB Consumer Confidence, ADP Non-Farm Employment Change & JOLTs Job Openings.

EUR

AUDEUR climbed steadily throughout Friday’s session, reaching 0.6023 highs in the late hours before coming off the boil to open today at 0.6002. The DAX and CAC gave up -0.3% and -1.4% respectively. Today, we’ll see German Preliminary CPI and GDP figures, with each expected a tad weaker than the previous release. Tomorrow’s Eurozone inflation figures are also expected to show further decline, adding to the European Central Bank’s decision to hold the Main Refinancing Rate at 4.5% last week.

GBP

AUDGBP reached 0.5243 highs over the weekend before easing off to open at 0.5232. The FTSE gave up -0.9% on Friday’s session. We’ll see UK Mortgage Approvals data this evening, while the big event this week will be Thursday evening’s Bank of England interest rate decision and Monetary Policy Report. UK headline inflation unexpectedly held steady at 6.7% y/y in September, although the BOE is confident inflation will resume its decline in October given the new energy price cap has taken effect. With unemployment edging higher and economic growth grinding to a halt, the central bank’s caution seems warranted. Markets are expecting the rate to be held at 5.25%.

NZD

AUDNZD has steadily gained ground from 1.0852 lows on Friday to open today at 1.0909. Dry on the data front today, while tomorrow will bring ANZ Business Confidence ahead of Wednesday’s major employment data.