Aussie Consumer Inflation Numbers Expected to Ease Today
AUD
Aussie Dollar was mixed against most majors overnight, looking for direction ahead of today’s crucial consumer inflation data. Asian equities were mixed on Tuesday with the Hang Seng falling 0.7% while the Nikkei was flat The ASX closed the session 0.5% higher with materials and energy driving the index higher. Not much movement for commodities with Gold and Silver both closing flat from previous and Iron Ore +0.4% in the green. Yesterdays Retail Sales numbers for January showing growth of +1.9%, better than 1.6% expected and drastically better than its -4% previous outcome for December which showed a hangover from the massive November numbers. Today we have Q4 GDP which is due at 11:30am and is expected to reveal that the economy grew solidly in the quarter. The RBA’s February SoMP has also penciled in +0.7% q/q and Melbourne Institute’s forecast points to growth of +0.5% q/q in Q4. Domestic demand growth is expected to have been soft in the quarter. Net exports are estimated to have contributed strongly to growth, but this is expected to have been at least partly offset by a drag from inventories. The major piece of data today is yearly CPI data expected at 8.1% which is lower than its previous outcome of 8.4%. The RBA will be desperate to see a softening in this number, which will directly affect their interest rate decision on Tuesday next week. Later in the day we also have Manufacturing and Non-Manufacturing PMI’s coming from China.
USD
AUDUSD is opening slightly lower this morning at 0.6728 as poor consumer confidence data led to a lack of volatility and markets indecisive weather to break through the 0.67c handle. There was a mixed night on Wall St saw the NASDAQ closing +0.3%, the S&P 500 -0.1% and the Dow Jones -0.6%. Last night the FHFA House Price Index for December declined by 0.1% against expectations of -0.2% while Case Shiller House Prices for December fell by 0.51% MoM and rose 4.65% YoY, worse than forecasts of -0.40% and +4.75% respectively. CB Consumer confidence printed at 102.9 worse than its forecasted 108.5. There was little reaction to this data though. Tonight the focus will be in the US where the ISM manufacturing index for February will be released. The overall index fell to a new cycle low of 47.4 in January and has likely remained in contractionary territory in February.
EUR
AUDEUR dipped overnight to fresh 2023 lows but recovered to open higher from where it took off yesterday, currently trading at 0.6362. European equities underperformed with Eurostoxx and CAC 40 closing down -0.5%. In an interview with Reuters, the ECB’s Lane said the rate plateau should be held for some time and the case for a 50bps rate hike in March remains solid. Lane also mentioned that rates may be in restrictive territory for a number of quarters. France Feb EU-harmonized CPI rose 7.2% in January, beating estimates of 7%. Euro area bonds dropped after the release and EUR/USD jumped to 1.0595. Shortly after, Spain Feb harmonized CPI came in at 6.1%, also beating estimates of 5.7%. Later into the evening we have German CPI m/m data expected at 0.5%. This is lower than its previous print of 1%. Germanies unemployment change is also forecasting -9k which is a pretty heavy turn around from its previous release of -22k. Germany’s Buba president Nagel will also a statement later into the night.
GBP
AUDGBP pushed up slightly higher this morning at 0.5598 after retracing from a 0.5545 low it had created overnight, last touched all the way back in December last year. Equities were down with the FTSE 100 falling -0.7%. Looking at data tonight we have Manufacturing PMIs expected at 49.2 which is flat from its previous release. Our most significant movement in potential Pound strength will come from GOV Bailey’s talk at 9pm. He is due to speak at the cost-of-living crisis conference organized by Brunswick Group in London. There are no specific details on the event or his talk at this time.
NZD
AUDNZD fell of its stool last night losing its 1.09 handle opening this morning at 1.0875. Unfortunately, on a data front we have been light-on these last few days which makes it hard to pinpoint any specific reason as to the drop in price. Recent NZD strength likely a result of faster pace of interest rate hikes by the RBNZ, and with RBNZ Gov Orr is expected to speak tomorrow we could see a continuation of this recent trend if Orr signals strong intent to continue to tighten monetary policy.