AUD Benefits from Improved Risk Sentiment Overnight
AUD
After a slow session yesterday through the usual absence of Monday data, things picked up in the overnight session as risk sentiment improved, assisting AUD to regain some of last week's losses. Asian equities were largely down to start the week with the CSI300 outperforming peers up 0.9%. The ASX finished the session down 0.2%. Commodities held to a decent performance on Monday's close with Silver and Iron Ore both up 0.5% and Gold flat from yesterday’s open. There was no data yesterday and a lack of significant data today with Westpac Consumer Sentiment at 10:30am as well NAB Business Confidence at 11:30am. Our first piece of potentially high impact data comes from Phillip Lowes speech in the senate tomorrow at 12pm where he will try to justify the RBA's stance on interest rate hikes after raising rates an eye watering 325 basis points over the past 10 months. Questions will also no doubt be raised about the intention for the interest rate path for the year ahead.
USD
A decent sway to the upside for AUDUSD overnight reaching a high of 0.6973 before opening this morning at 0.6964, 50 pips higher from yesterday's open of 0.6914. A positive start to the week on Wall St saw the NASDAQ trading +1.2%, while the S&P 500 and the Dow Jones were both +0.9% late in the session. This morning US Fed's Bowman spoke stating he was on the wires and that further tightening was still necessary to bring inflation back to target with the labour market too strong. Into the morning the US core and headline CPI numbers for January should show an acceleration from November and December. The ~5% m/m increase in gasoline prices should make a positive contribution to headline and impact both core and core services ex-housing through airline fares. Elsewhere, used cars & trucks may contribute positively after providing relief in recent months. Manheim’s Used Vehicle Index rose +2.5% m/m in January, the strongest gain since Nov-21.
EUR
There was a slight push to the upside for AUDEUR last night just slightly reclaiming the 0.65 handle before opening this morning at 0.6494. European equities opened higher across the board with the Eurostoxx 50 +0.3%. ECB’s Guindos hit the wires saying rate increases beyond March will depend on the data. We then heard from Centeno who said the new forecast will be very important for policy. The BOE’s Haskel commented that the inflation outlook is unusually uncertain, but the role is to ward off second round inflation. The EU raised Euro-area 2023 growth forecast to 0.9% from 0.3% previously. The Euro-area 2023 inflation forecast was lowered from 6.1% to 5.6%. In response, EU’s Gentiloni said the main risk to growth forecasts is geopolitical. Tonight, we have the Eurozone's quarterly GDP for Q4 data which is expected to show a 0.1% increase which is flat from its previous release, showing just a glimmer of growth for the European economy.
GBP
A lack of volatility for AUDGBP opening flat at 0.5733 from yesterday as markets prepare for a heavy on data night tonight for the pound. The FTSE100 was up +0.2% on close as risk sentiment improved in general across markets. There was no data from the UK yesterday, however at 6pm tonight we have UK’s monthly Claimant Count Change expected at 17.9k which is marginally better than its previous of 19.7k. This data is significant as it measures the change in the number of people claiming unemployment related benefits. Lower than its expected could cause a decent amount of strength for the pound. Tonight, we also have Average Earnings expected at 6.2% down 0.2% from its previous of 6.4% as well Unemployment Rate data expected flat from previous at 3.7%.
NZD
AUDNZD indecisive opening into the morning flat from yesterday at 1.0952. Today in New Zealand, the RBNZ’s inflation expectations survey will be watched very closely by markets. The key 2-year ahead measure jumped higher in Q4 after showing earlier signs of cooling a little. Markets are currently pricing in +56bps of hikes at the RBNZ's meeting on 22 February and any further increase in inflation expectations should see markets toy more seriously with a 75bp hike.