Bullish AUD Ahead of CPI Release

AUD

The Aussie dollar opens mostly up across the board after the RBA's Governor Michelle Bullock commented on resilient demand and ongoing price-pressures, thereby prompting traders to firm up bets for the RBA to hike rates in the first half of 2024. Commodities came through mixed with Copper 1.1%, Iron Ore -0.3%, Silver 0.3% and Gold flat. Asian equities were also mixed with the ASX +0.4%, Shanghai Comp 0.2%, and the Nikkei down -0.1%. Yesterday's Retail Sales printed short of expectations, showing a -0.2% decline m/m after last month's surprise uptick. Early this morning, we had some minor data out of China with their CB Leading Index m/m which came through lower than expected, however, all eyes today will be focused on our CPI y/y set to be released at 11:30am with the consensus estimate expecting a softer AU monthly CPI for October (5.2% vs. 5.6% Sep). Recently, Bullock noted the RBA has been on the cautious side regarding rate hikes, but stated that monetary policy remains restrictive and that interest rate increases have dampened demand.    
 

USD

The Australian dollar furthered recent gains against the greenback overnight, reaching 4-months highs of 0.6665 before retracing to open at 0.6649. Wall Street was mostly flat with S&P 500 -0.1%, Nasdaq + 0.1%, and Dow Jones +0.1%, while the Fed's Waller indicated the central bank is likely to extend the current interest rate pauses into 2024. Tonight, there will be the release of Prelim GDP q/q and Prelim GDP Price Index q/q.
 

EUR

The AUDEUR coupling maintains its 0.6 handle, opening higher this morning at 0.6048 after some hawkish comments from Michelle Bullock yesterday. European equities came through mixed with the DAX +0.2% and CAC -0.2%. On the news front we have some major data to be released out of the Eurozone with French Final Private Payrolls q/q, German Prelim CPI m/m, and Spanish Flash CPI y/y, and German Import Prices m/m.
 

GBP

The AUDGBP opens flat this morning at 0.5232 after yesterday’s BRC Shop Price Index y/y showed that inflation fell 0.9 percentage points in November to 4.3%, the lowest level since June 2022. It’s the sixth-straight month that the trade association has recorded declines. UK equities were also closed in the red with the FTSE -0.1%. No major news set for release today with only the M4 Money Supply m/m, Mortgage Approvals, and Net Lending to Individuals m/m being released later this evening. Overnight, we have BOE Gov Bailey speaking at the 50th anniversary of the London Foreign Exchange Joint Standing Committee.
 

NZD

The AUDNZD is trading sideways this morning, remaining flat at 1.0824. Big day ahead for our Kiwi neighbors with all eyes on the Official Cash Rate, RBNZ Monetary Policy Statement and Press Conference at noon. Expectations are that the cash rate will remain the same at 5.50%.