Status Quo at RBA with New Governor

AUD

The Aussie dollar opens lower across the board after the RBA left the Cash Rate unchanged at 4.10% yesterday, as widely anticipated. Prior to yesterday’s decision there was speculation that a November hike was on the table due to strong Q3 services price inflation, however, yesterday’s statement did not highlight any shift in concern about the trajectory of inflation. Economists are torn over whether there will be one more hike by the end of 2023, or whether rates will remain on hold. Equities followed suit with the Nikkei down 1.6%, Hang Seng down 2.7%, and the ASX reached a six-month low closing down 1.3% lower. Commodities on the other hand performed mixed with Copper down 0.6%, Iron Ore down 1%, and Gold and Silver mostly flat at 0% and 0.1% respectively. Looking to the news, we do not have anything of note today, and it is a Bank Holiday in China.

USD

The AUDUSD fell 1% overnight, opening lower at 0.6303 after the RBA’S fourth rate hold. The Greenback soared after the JOLTS Job Openings printed at 9.61 million (810k above forecasts), sending 30y treasury yields to a new 16-year high. Wall Street closed in the red with the Dow Jones down -1.3%, the S&P 500 down -1.5% and the Nasdaq down -1.9%. Tonight, we'll see ADP Non-Farm Employment Change and the ISM Services PMI, both of which are expected slightly lower than previous readings.

EUR

The AUDEUR opens lower this morning at 0.6022, reeling off the effects of the RBA’s rate hold yesterday. A volatile session saw Eurozone equities close in the red with the DAX down -1.1% and CAC down -1.0%. We have a myriad of data out of the Eurozone today with multiple Final Service PMIs, however, all eyes will be on ECB President Lagarde speaking later this evening at 7:15pm, alongside PPI m/m and Retail Sales m/m set to be released at 8pm.

GBP

The AUDGBP took an immediate tumble yesterday after the RBA’s rate decision opening this morning down at 0.5217. The FTSE followed suit closing in the red down -0.5%, with no major news from the UK yesterday. Another quiet day for the pound with only the Final Services PMI set to be released at 7:30pm this evening.

NZD

The AUDNZD gave up about 30 bps overnight to open at 1.0662 ahead of today's RBNZ Official Cash Rate announcement and accompanying statement. Most Shadow Board members recommend the RBNZ hold (again) at 5.5% as the full impact of recent interest rate increases are yet to be transmitted into the broader NZ economy. Two Members recommended a 25bps hike, with the view being that upside risks to inflation appear more crystalised recently. Any surprise result today could bring volatility to the AUDNZD pair.