AUD Rallies After Hawkish Fed Pause
AUD
The Aussie dollar opens up higher across the board against the majors this morning, while Asian equities came through strong with the Shanghai Comp up 0.1% and Nikkei up 2.4%. The ASX followed closing at +0.8%. Commodities on the other hand came through mixed with Gold remaining unchanged, Silver +0.7%, Iron Ore -0.5%, Crude oil -0.1%, and Natural Gas -1.4%. Very little domestic data today with only the Goods Trade Balance being released at 11:30am with expectations at 9.55B from previous 9.64B. No data out of China until tomorrow midday with their Caixin Services PMI.
USD
The AUDUSD has reached 3-week highs, opening at 0.6396 this morning, after the Fed unanimously decided to hold the Funds Rate at 5.5%. The ADP Non-Farm Employment Change and ISM Manufacturing PMI each missed expectations, while stronger-than-expected JOLTs Job Openings failed to prevent the USD from weakening. A fall in treasury yields helped the Nasdaq close +1.6%, the S&P 500 +1% and the Dow Jones +.7%. The FOMC decided to hold rates at 5.50%, contributing to the longest period of no change since before the tightening cycle that started in early 2022. Hawkish commentary followed with Fed Chair Powell stating that the Committee still has a bias towards more hikes, rather than the prospect of cuts on the horizon. This is understandable given the Fed doesn't want markets to backtrack on the recent repricing of 'higher for longer' policy interest rates. Tonight, we'll see Unemployment Claims which are expected at 210K, in line with the previous reading.
EUR
The AUDEUR has regained the 0.60 handle, opening at 3-week highs of 0.6048 this morning while eurozone equities followed the international trend with DAX closing at +0.8% and CAC closing at +0.7%. Following from yesterday’s flurry of data, we have Spanish, Italian, French, and German manufacturing PMI’s to be released tonight, finishing up with Eurozone’s Final Manufacturing PMI which is expected to remain in contractionary territory at 43.0.
GBP
The AUDGBP has rallied to 1-month highs, opening today at 0.5264. UK equities closed in green with FTSE at +0.3%. No data coming out of the UK throughout the day until tonight at 11:00pm, where we have the Official Bank Rate to be released with expectations of the rate remaining unchanged at 5.25%. BOE Governor Andrew Bailey and his colleagues have reiterated their commitment to returning inflation to 2% by holding the interest rate at a higher level. This comes after a run of 14 straight hikes, which ended in September.
NZD
The AUDNZD opens slightly higher this morning at 1.0933. There has been no data released overnight or set to be released today. The final piece of data to be released out of the NZ this week is tomorrow’s RBNZ Statement of Intent (tentative release) which will provide some insight of the bank’s strategic priorities for the next financial year.