US Fed Poised to Hold Rates

AUD

The Aussie dollar trades mostly lower across the board this morning after Chinese Manufacturing (49.5 from expected 50.2) and Non-Manufacturing (50.6 from expected 51.8) PMIs disappointed yesterday. After moving back into expansionary territory for the first time since April last month, the manufacturing print has now fallen back intro contractionary territory. Commodities on the other hand fared better with Iron Ore +0.4%, Silver +0.2%, Gold flat, with only Copper falling at -0.2%. Asian equities came through mixed also with the ASX up 0.1%, Nikkei +0.5% and the Shanghai Comp -0.1%. We have a few bits of minor data today with our Building Approvals and Commodity Prices set to be released, however the primary focus will yet again be on the data out of China with their Caixin Manufacturing PMI.

USD

The Australian dollar is trading lower against the US dollar this morning at 0.6337 after the contractionary results from the Chinese PMIs. US equities closed in the green with the Dow Jones +0.4%, S&P 500 +0.6%, and the NASDAQ +0.5%. A fair amount of US data overnight with the main events being the Employment Cost Index q/q coming through at 1.1%, showing that the US labor market is still hot & workers are still empowered. The CB Consumer Confidence also outperformed, coming through at 102.6, however, down from an upwardly revised 104.3 in September. Looking ahead tonight we have the ADP Non-Farm Employment Change, ISM Manufacturing PMI, and JOLTS Job Openings set to be released. All eyes will be on the Federal Funds Rate at 5am tomorrow with officials widely expected to hold interest rates at 5.50% (22-year-high) as they balance efforts to lower inflation while staving off a recession.

EUR

The AUDEUR takes a tumble, once again losing its 0.60 handle to open this morning at 0.5987. There was a myriad of data released out of the Eurozone yesterday with the primary focus being the Core CPI Flash Estimate y/y, and CPI Flash Estimate y/y forecasts showing the Core CPI to remain the same at 4.2%, while the headline estimate is expected to be 2.9% in October 2023, down from 4.3% in September. German Buba President Nagel also stated early this morning that inflation has now fallen significantly, but is still too high, and that they must not let up too soon. European equities closed in the green with the DAX +0.6%, and CAC +0.9%. A quite day on the news front for the Eurozone with nothing set to be released. There are also French and Italian bank holidays.

GBP

The AUDGBP coupling trades lower this morning at 0.5212 after steadily declining throughout yesterday's session. No major news out of the UK yesterday with only the BRC Shop Price Index y/y being released and coming in lower than previous at 5.2%. UK equities closed in red with the FTSE -0.1%. We have some minor data set to be released today with Nationwide HPI m/m, and Final Manufacturing PMI, however all eyes will be focused on tomorrow with the Bank of England interest rate decision. During the September monetary policy meeting, the Bank of England opted to keep rates on hold, with five members out of nine voting for a pause. Over the past six weeks, the market received little UK data for the BOE members to change their stance. Yet, September’s inflation numbers showed that core CPI rose by 0.5% MoM and 6.1% YoY, slightly above expectations. Therefore, it is reasonable to expect those members that have voted for a hike last month to vote for the same this week. 

NZD

The Aussie trades higher against the NZD this morning at 1.0915 after their Employment Change q/q came through lower than forecasted at -0.2%, and their Unemployment Rate was left unchanged at 3.9%. Looking forward, we have the RBNZ Gov Orr Speaking later this morning at 11am. No other news is set to be released apart from a possible RBNZ Statement of Intent which is tentatively set for release this Friday.