Markets Await Tomorrow's RBA Interest Rate Decision
AUD
The Aussie Dollar trades marginally higher, benefitting from optimism in global equity markets closing out last week. Asian equities finished the session higher with the Nikkei outperforming up +1.6%. The ASX closed Friday’s session +0.4%, despite ending the week down -0.3% in the 4th consecutive weekly loss. Commodities also gave the AUD a boost with Gold gaining +1.2%, Iron Ore up +0.5%, though Copper was the only detractor losing -0.2%. There was no data locally on Friday, only Caixin Services PMI from China which came in better than expected to 55.0 against a 54.3 forecast. The data caps off a strong set of data from China, adjacent to the imperative Caixin Manufacturing PMI earlier last week which has largely boosted the outlook for a bounce back in China. Looking ahead, the Melbourne Institute Inflation Gauge is out at 11am, but the focus will be on whether the Reserve Bank of Australia softens its language in light of recent weaker data. A CPI reading of 7.4%, a slump in jobs figures and new building approvals could present an opportunity for the RBA to take a foot off the pedal. We’ll find out at 2:30pm tomorrow, before Chairman Philip Lowe speaks on Wednesday.
USD
The AUDUSD pushed up from Friday's open of 0.6730 to trade at 0.6760 this morning, largely thanks to the aforementioned optimism in equities. Markets were willing to take risk on and Wall St rallied into the weekend, the NASDAQ closing +2.0% while the S&P 500 and the Dow Jones posted gains of +1.6% and +1.2% respectively. The Greenbacks recent grip on the Aussie was loosened but found some support when US February ISM Services Index printed at 55.1, beating estimates of 54.5. It’s a slow start to the week for the US before a series macro releases and data, Fed Chair Powell will testify early Wednesday morning, before a Jobs numbers on Wednesday, Thursday, and Friday night.
EUR
The AUDEUR also trading a touch higher, even with more aggressive ECB speakers hitting the wires over the weekend. European equities pushed higher to close the week with the Euro Stoxx 50 up 1.3% and DAX +1.7%. A series of lesser data offered little to entertain markets, Finalised Italian, German, Spanish, and French Services PMIs all came and went without a whisper. The ECB’s Vasle predicts more interest rate hikes will be needed throughout the year. We then heard from ECB’s Guindos who praised the Eurozone for performing better than expected, and is hoping inflation may fall below 6% by mid-year. ECB’s Muller aired to the cautious side by saying high underlying inflation is a worry, with hesitation now likely requiring more action later on. It’s a light week for European data, with Retail Sales first out of the gate tonight, before second-tier data dribbles in throughout the week.
GBP
The AUDGBP was the only outlier, losing ground in what has been a slippery slope from recent highs, falling through the 0.56 handle again to 0.5596 this morning. There’s been little data to attribute the losses, with an on-par Final Services PMI reading the only piece out of the UK. Perhaps the recent Brexit agreements offers stability and direction for the Pound. Thursday’s GDP m/m figures will offer the next best data point for the Britts, who are aiming at avoiding a technical recession again.
NZD
The AUDNZD regained some lost ground to trade up to 1.0868 currently. RBNZ Gov Orr addressed markets at the New Zealand Economics Forum, and said “We need to bring inflation back to a target range. But of course, we need to do it over a reasonable horizon so as not to unnecessarily crash the economy and turn temporary, slower growth into permanent unemployment,” which gave Aussie Bulls rhythm to strengthen over the weekend. ANZ Commodity Prices are out this morning at 11am, with only some Manufacturing data later in the week.