Fed in Spotlight After CPI Bumps Up
AUD
The Aussie dollar opens either flat or lower against majors this morning, with SGX Iron Ore giving up -1.3% in yesterday’s session. Gold posted +0.1% gains, while Silver rose +0.3%. The ASX closed +0.5% higher on the back of strong performance in IT, Consumer Staples & Real Estate, while Asian equities finished the day ahead, led by Hong Kong’s +1.1% gain and South Korea’s +0.4%. RBA Governor Michelle Bullock spoke at the AusPayNet summit in Sydney yesterday morning, discussing Australia’s payment system and withholding from providing commentary on monetary policy. No Aussie data set for release today with focus remaining on tomorrow’s Unemployment Rate and Employment Change releases. The Unemployment Rate is expected to tick up to 3.8%.
USD
AUDUSD opens lower this morning after last night’s US CPI data suggested inflation progress has stalled given sticky services pricing. The pair traded sideways throughout the evening before whipsawing between 0.6613 and 0.6542 on the news, opening this morning at 0.6556. Despite this, all three US indices made minor gains in the session – Dow +0.4%, S&P 500 +0.5%, Nasdaq +0.5%. US CPI rose 0.1% m/m, or 3.1% y/y, while the Core figures (which excludes food and energy prices) increased 0.3% m/m, or 4.0% y/y. When looking at the Fed’s so-called ‘supercore’ services (services pricing excluding energy and shelter), there is residual strength, rising to 0.44% m/m from the recent 0.2% m/m, although economists currently believe annual inflation of 2% to 2.5% will become a reality by Q2 2024. Tonight, we’ll see US PPI data (expected flat for the month) ahead of tomorrow morning’s Fed interest rate decision and FOMC Press Conference. The central bank is expected to hold steady at 5.5%, with their ‘higher-for-longer’ strategy on interest rates slowly crumbling at markets become more bullish on rate cuts within the first half of 2024. PPI data and Fed announcements will likely bring volatility for the AUDUSD pair over the next 24h.
EUR
AUDEUR reached 0.6127 highs yesterday afternoon before falling sharply overnight to open today at 0.6076. The DAX was flat while the CAC gave up -0.1%. Last night’s German sentiment surveys exceeded expectations, with the ZEW Indicator rising despite Germany’s budget crisis. Tonight will bring the Eurozone’s Industrial Production m/m, while all eyes remain on the ECB’s interest rate decision in Friday’s early hours.
GBP
AUDGBP reached 0.5248 highs last night before falling off to open this morning at 0.5218. The FTSE was flat in yesterday’s session. The latest UK wages and jobs data came out last night, doing little to move the needle on the market’s view of the UK jobs market. Wage growth was weaker than analysts expected (7.2%, against exp. 7.8%, previous release 8.0%), while the Claimant Count Change printed at 16.0k (exp. 20.3k, prev. figure 8.9k). While there are further mild signs that the labour market is cooling, there’s nothing yet to point to an imminent leap in joblessness or redundancies. Tonight, we’ll see the UK’s GDP m/m, expected to contract -0.1% after a +0.2% gain last month.
NZD
AUDNZD has given up further ground overnight to open at 1.0698. Today, we’ll see the Kiwi Current Account (exp. -12.1 billion) and the monthly Food Price Index (FPI – no expectations posted). Eyes remain on Thursday morning’s GDP q/q figure, expected to increase by +0.2% following a +0.9% gain in the previous quarter.