Borrowers Set for Reprieve in RBA Call

AUD

The Aussie dollar has given back yesterday’s gains, opening slightly lower against majors this morning while the ASX closed +0.7% higher as IT and Real Estate climbed 1.9% and 1.6% respectively. Asian equities started the week mostly in the red as the Hang Seng fell -1.1%, the Shenzhen -0.7% and the Nikkei -0.6%. Today will bring the final RBA meeting for what has been a tumultuous 2023. In the crusade to crush price growth, the RBA has hiked interest rates 13 times since May last year, bring record 0.1% lows to the current 4.35%. Interest rate markets currently indicate a 98% implied probability the cash rate will remain unchanged today, supported by recent downticks in both CPI and Retail Sales data. Regardless, the data paints a mixed picture for the broader Australian economy as weaker household consumption is contrasted by the Unemployment Rate remaining near 50-year lows at 3.7%, with October’s labour force data revealing a much larger than expected 55k jobs added to the economy. Before the interest rate release, we’ll see China’s Caixin Services PMI which is expected at 50.5. A stronger print would likely provide much-welcomed strength for the Aussie dollar.

USD

AUDUSD reached for the 67c handle in yesterday’s session, having topped at 0.6691 in the late morning before retracing to open today at 0.6616. A softer start to the week for U.S. equities with the Nasdaq trading -1.1%, the S&P 500 -0.7%, and the Dow Jones -0.2%. Tonight will bring the JOLTS Job Openings report, expected to correct back lower to 9.31m and thereby suggest a better balance in the US labour market. If above-expectations, this could be a mild USD-negative, which would give the Aussie dollar more room to gain ground. We’ll also see the release of the ISM Services PMI.

EUR

AUDEUR peaked at 0.6148 in the late morning yesterday before falling off to open today at 0.6108. The DAX was flat while the CAC gave up -0.2%. This week will bring a great deal of low-tier data from the Eurozone, with tonight’s Final PMI releases largely expected to remain in contractionary territory, although somewhat stronger than the previous releases.

GBP

After hitting 0.5268 highs in yesterday’s early afternoon, AUDGBP retreated to open lower at 0.5237. The FTSE gave up -0.2%. The UK data calendar is very quiet this week, with just Friday’s release on Consumer Inflation Expectations of note. Later this morning, we’ll see the BRC Retail Sales Monitor y/y, while tonight will bring the UK’s Final Services PMI, expected in slightly expansionary territory at 50.5, being in line with the previous figure.

NZD

AUDNZD opens relatively flat at 1.0739, having gained initial ground in the late morning yesterday before retracing to where we are currently. Another quiet week for the Kiwis, with today’s focus being ANZ Commodity Prices m/m. No expected figures have been posted.