AUD Continues to Slide
AUD
The Aussie is down against its major pairs this morning, helped along by a risk off environment and slowing wage growth. The Wage Price Index q/q printed below expectation yesterday, coming in at 0.8%, instead of the 1% markets had priced in. Another piece of data was the Construction Work Done q/q, measuring the amount of infrastructure construction and investment for the period, which has a sizable impact on employment and spending, but also speaks to confidence of investors. This metric came in well below expectation, coming in at -0.4%, against the 1.6%. The Aussie dollar isn’t being helped along by commodities in the past 24 hours, with Gold down 0.6%, Silver down 1.5%, and Copper being down 0.7%. Iron was the exception to the rule, gaining 0.5% overnight. Later today we have Private Capital Expenditure q/q and RBA Deputy Gov Bullock testifying before the Parliamentary Joint Committee on Corporation and Financial Services in Sydney.
USD
The AUD sinks lower against the USD, falling about 1% over the course of yesterday, opening at 0.6803 this morning. This move was helped along by Aussie weakness, but also the fall out from the PMI data earlier this week may be helping the US trail higher. US Equities finishing in the red in the overnight session with the S&P500 -0.1%, NASDAQ -0.2%, and Dow Jones -0.5%, not as aggressively down as yesterday but equity market sentiment is still being influenced by the PMI data released earlier in the week. FOMC minutes were released with little to no reaction from markets. Participants in the Fed discussion said inflation in the last three months has eased, but they need to see more progress. They also noted that it was important that overall financial conditions be consistent with the degree of policy restraint that the committee is putting into place in order to bring inflation back to the 2% goal. A large end to the week for the US economic calendar, US Prelim GDP q/q in printing early in the morning tomorrow, currently priced in to be flat from last quarter at 2.9%. Unemployment Claims are also being released, as well as National Gas Storage and Crude Oil Inventories. On Saturday Core PCE Price Index is m/m is printing – this is the main metric the Federal Reserve uses to measure inflation, meaning this is the main piece of inflation data that they use when making interest rate decisions.
EUR
The Aussie opens up about 26bps lower against the Euro this morning, starting the day at 0.6414. A large week of data for the Eurozone this week. Yesterday consumer inflation for Germany m/m came in as expected at 1%. The German ifo Business Climate index printed at 91.1, an improvement on last month – this index is a survey of 9,000 manufacturers, builders, wholesalers, services and retailers. Later tonight, we have Final CPI y/y for the Eurozone (predicting 8.6%), or Final Core CPI y/y (predicting (5.2%).
GBP
AUDGBP is fractionally down over the past 24 hours, coming in at 0.5647 at Australian opening this morning. Not much movement here, as no economic data was released from the UK yesterday. The FTSE finished in the red, down -0.6%. Tonight, MPC member Mann in due to deliver a speech called “the results of rising rates: Expectations, lags and the transmission of monetary policy”. MPC member Cunliffe is speaking at the G20 financial and Central Bank Deputies Meeting. Later this week we have the CBI realized Sales predicting an improvement from last month at -11 vs Jan’s -23. And after that GfK Consumer Confidence.
NZD
After the RBNZ interest rate announcement yesterday, the AUD feel 0.95% against the New Zealand Dollar. The RBNZ raised interest rates by the expected 50bps, moving their Official Cash Rate to 4.75% - currently one of the highest in western economies. Governor Orr spoke in the wake of the decision announcement, saying there are early indications that inflation is slowing, and that rebuild efforts after the Cyclone damage may add inflationary pressure. Ultimately stating that Monetary Conditions need to tighten further. Overshadowed by the rate hike decision was Credit Card spending y/y, which also printed, which was up 17.9% on last month.