Aussie Inflation Data Expected to Ease Today

AUD

The Aussie Dollar is down across the board this morning ahead of today's all important inflation data. Asian equities were mixed on Tuesday with the Nikkei rising 0.1% and Hang Seng falling 1.7%, while the ASX was closed given the ANZAC day public holiday. In Australia today, CPI for the March quarter will be closely watched as always but also because the RBA has flagged that it is a key piece of information that will inform the next cash rate decision on 2 May. Headline CPI inflation is expected to have been around +1.4% q/q and +6.5% y/y, which would show a decent decrease on the previous number and would be softer than the RBA’s 7.4% y/y forecast in the February SoMP. The trimmed mean inflation is also expected to show a decrease as the higher interest rate environment starts to put the brakes on the economy.

USD

AUDUSD opens lower after Australia’s ANZAC bank holiday closing at 0.6625, having touched 2 month lows early this morning. Weak US corporate earnings and concerns surrounding the regional banking sector weighed on broader risk sentiment overnight.  Wall St was softer with the NASDAQ closing -2%, the S&P 500 -1.2% and the Dow Jones -1%. U.S. 2-year yields fell 14bps to 3.95% while crude oil was 2% lower at $77.10 a barrel. To the data, and March New Home Sales rose by 9.6% to 683k to easily beat expectations of a 1.3% decline to 632k.  April Consumer Confidence fell to 101.3 from 104.0 against expectations of no change at 104.0. Tonight sees the release of Durable Goods Orders in the US, accompanied by some other low-impact pieces of data.

EUR

AUDEUR continued its downward trajectory, reaching new 2.5-year lows early this morning before opening slightly higher at 0.6037. European equities opened the session lower with the CAC 40 down 0.7% and Euro Stoxx 50 falling 0.6%. There has been a distinct lack of economic data from Europe with no major data due until Friday's inflation data from Germany.

GBP

AUDGBP reached 14 month lows this morning, continuing its overall downward trend of the last two months, opening at 0.5337 today. Stocks were down overnight in the UK with the FTSE losing 0.3%. Public sector net borrowing in March 2023 was £21.5 billion, £16.3 billion more than in March 2022, and the second-highest March borrowing since monthly records began in 1993. Today CBI Realised Sales are forecasted in at 4 from a previous 1 indicating potential for a higher sales volume, being a leading indicator of consumer spending. There is no other major news to be released for this week.

NZD

AUDNZD continued its recent downward retracement, opening lower at 1.0795. Today's NZ Trade Balance results were poor coming in at -1273M from a forecasted -500M, which mean that import demand is exceeding export and currency demand. At 1:00pm today Credit Card Spending y/y will be released, correlated with consumer spending and confidence which previously came in at 25.6%. Tomorrow, ANZ Business Confidence will be released as a leading indicator of economic health