All Eyes on RBA This Afternoon
AUD
The Aussie dollar took a tumble over the weekend, opening lower against the majors this morning, with Commodities following suit: Gold down -0.1%, Silver down -0.2%, Iron Ore down -0.7% and Copper down -2.7%. Asian Equites were soft into the close, with the ASX down -0.2% and the Shanghai Comp up +0.1%. Over the weekend, China's Caixin Manufacturing & Services PMIs furthered their convergence towards the 50.0 level after manufacturing conditions improved slightly for the second consecutive month in September (50.6), while services business activity weakened to 9-month lows (50.2). Today we have the RBA Cash Rate announcement at 2:30pm. Markets expect the rate to remain unchanged at 4.1%, although many economists believe there is significant underpricing of upside risks to a hike. Being Michelle Bullock's first Cash Rate announcement as the new RBA Governor, today will show what tone she is looking to set moving forward.
USD
The AUDUSD fell hard over the weekend after a strong rally on Friday, with the pair just touching the 0.65 handle before dropping nearly a cent and a half to open this morning at 0.6365. Wall Street was soft into the close, with the Dow Jones and S&P 500 both down -0.2% and the NASDAQ up +0.6%. On Friday night we had Core PCE Price Index m/m released, reading 0.1%, against expectations of 0.2% and the previous 0.2%. This has boosted the case for the Fed not hiking rates in the current quarter, although recent upward revisions to household savings suggests consumers may remain more resilient than previously anticipated, supporting the case for the Fed to hold rates 'higher for longer'. Late last night we also had the ISM Manufacturing PMI, coming in higher at 49, expected at 47.8 and previously at 47.6. While this represents the 11th consecutive headline figure in contractionary territory (below 50.0), the Production sub-figure broke out to 52.5, which is the best reading since July 2022. Tonight, we'll see JOLTS Job Openings, with the US economy expected to open 8.81m jobs (excluding farming) during September).
EUR
AUDEUR rallied on Friday to highs unseen since July, then slid over the weekend into this morning’s open of 0.6073. European equities took a hit, with the DAX and CAC both closing down 0.9%. On Friday we had Core CPI Flash Estimate y/y and CPI Flash Estimate y/y, both arriving under expectations. Notably, the Core figure came in at 4.5%, expected at 4.8% and previously at 5.3%. This unexpected drop in inflation across the Eurozone affirms the ECB’s stance that they are finished with rate hikes for the time being. Looking forward, today is light on important data, with the most important being French Gov Budget Balance, previously at -169B.
GBP
The AUDGBP had some volatility, with the pair gaining over Friday night, flirting with the 0.53 handle, before giving back the gains over the next few days, opening at 0.5265. UK equities took a hit, with the FTSE closing down -1.3%. Revised Business Investment q/q was released on Friday, coming in higher at 4.1%, above the forecasted 3.2% and the previous 3.4%. Final GDP q/q came in on expectations as unchanged at 0.2%. Looking forward, it is a light week for important data out of the UK, with the most important being the Construction PMI being released on Friday evening, expected to decrease from 50.8 to 50.
NZD
The AUDNZD fell over the weekend, dropping over 80 basis points and losing the 1.07 handle, opening this morning at 1.06970. To the news, on Monday we had Building Consents m/m, showing a further decline from a previous -5.4% to -6.7% and this morning we had NZIER Business Confidence coming in at -52 better than the previous -63. The next piece of meaningful data will be tomorrow's Official Cash Rate announcement; with expectations that the RBNZ are finished hiking rates, any deviation from 5.5% could add some volatility.