Weakening USD Opens Door for AUD

AUD

The Aussie dollar opens mixed against majors after a relatively quiet session on Friday saw the ASX climb +0.2%, with a -1.7% fall in IT offset by +1.6% gains in Utilities. A mixed day in Asian equities to finish the week as the Hang Seng closed -2.0% lower while the Nikkei pushed +0.5%. SGX Iron Ore gave up -1.2%, Copper gained +0.6% while Gold and Silver climbed +0.5% and +2.6% respectively. Dry on the data front today ahead of tomorrow’s domestic Retail Sales m/m figures. These are likely to draw attention given RBA Governor Bullock’s recent spotlight on local demand-driven price pressures. She’s also due to participate in a panel discussion in Honk Kong tomorrow afternoon titled: “Inflation, Financial Stability and Employment”. Given the Aussie dollar has enjoyed a strong rally recently off the back of Bullock’s hawkish tone, Wednesday’s CPI figures will likely grab a lot of attention. The annal figure is expected to print at +5.2%, down from last month’s +5.6%, although still well-above the RBA’s target bank of 2 to 3%.

USD

AUDUSD made solid moves in the latter half of Friday’s session, reaching 0.6591 highs (unseen since August 11) in the late hours before falling off slightly to open at 0.6584. Wall St was mixed in the first session back from the Thanksgiving break with the Dow Jones closing +0.3%, the S&P 500 unchanged and the Nasdaq down -0.1%. US PMIs printed mixed on Friday evening with the Manufacturing figure at 49.4 (expectations 49.9) and the Services figure at 50.8 (expectations 50.4). Digging into the data, US businesses signaled a further marginal expansion in output during November, with the rate of growth in business activity in line with that seen in October. Most notably, private sector employment fell for the first time since mid-2020 amid muted demand conditions, further signaling ongoing impacts of the Fed’s recent interest rate hiking campaign. A busy week for the US dollar will see CB Consumer Confidence on Wednesday, Preliminary GDP on Thursday as well as Unemployment Claims and the Core PCE Price Index on Friday evening.

EUR

AUDEUR traded largely flat on Friday, opening today at 0.6017 while the DAX and CAC each gained +0.2%. European Central Bank President Lagarde is due to at the European Parliament in tomorrow’s early hours, while the key events this week will be German Preliminary CPI on Wednesday and Eurozone CPI Flash Estimates on Thursday evening.

GBP

AUDGBP has given up a small amount of ground, opening at 0.5223, while the FTSE gained +0.1 after what was an eventful week in the UK. The tax cuts announced by the Treasury are, on paper, Sterling-positive. They are both pro-growth and pro-inflation and do not seem to have excessively unnerved the bond market – especially when compared to those announced previously under former PM Liz Truss. A relatively quiet week ahead for the Pound, with the only key event being Bank of England Governor Bailey’s speech on Thursday morning at the 50h anniversary of the London Foreign Exchange Joint Standing Committee.

NZD

AUDNZD gave up ground in Friday’s session, having steadily declined before falling off sharply to open at 1.0812. No Kiwi data ahead of Wednesday’s RBNZ interest rate decision and Monetary Policy Statement. Leading economists expect the Official Cash Rate (OCR) will remain unchanged at 5.5%, while short-term inflation forecasts will be reduced (but the longer-term profile will likely be unchanged).