RBA Leaves Door Open for a Further Rate Hike

AUD

The Aussie dollar has maintained an even level across the major currency pairings overnight, except for minor gains against the US Dollar. Equities also experienced minor changes, with the Hang Seng down 0.6% while the Nikkei added a modest 0.5%. The ASX closed 0.3% lower with energy stocks weighing on the index. Gold and Silver remained tight, down 0.1% and up 0.1% respectively, whilst Iron Ore jumped 0.7%. The Aussie dollar saw strong gains across the board upon the release of the RBA Board Meeting Minutes yesterday at 11:30am which were interpreted by markets with a hawkish bias as the RBA members maintained the need to reassess the case for further rate hikes after April's pause. The AUD wasn't able to hold onto the gains as it was sold off against the crosses overnight. We also had some data out of China, with their GDP q/y which outperformed expectations, coming in at 4.5% beating the forecasted 4.0%. Only data out of Australia today will be the MI Leading Index m/m released at 10:30am.

USD

AUDUSD opens higher at 0.6731 this morning, just shy of the overnight highs of 0.6747, the AUD benefitting after the release of yesterday's RBA Meeting minutes (see above). Wall Street had minimal movement overnight, with the S&P 500 gaining 0.1% while the Dow Jones & NASDAQ held their ground. US 2-year yields edged fractionally higher while crude oil was steady at $80.85 a barrel. No Major news out of the United States yesterday, with Building Permits coming in at 1.41M and Housing Starts at 1.42M. A quiet day ahead for macro-data from the US, with markets awaiting Unemployment Claims on Thursday night.

EUR

The AUDEUR opens flat this morning at 0.6130, having fluctuated within a tight 33 pip range throughout the last 24hrs. European equities traded strongly with gains of circa 0.5% across the board. Overnight the market had very little reaction to ECB President Lagarde speaking in New York, as well as the release of German ZEW Economic Sentiment, which significantly missed the expectations of 15.5, coming in at 4.1. Look out for Europe’s Final CPI y/y and Final Core CPI y/y to be released at 7:00pm tonight, both of which are expected to show no signs of improvement despite the ECB's best efforts so far to get inflation under control. Stubbornly high inflation will increase the pressure on the ECB to continue its current rate hike trajectory. 

GBP

The AUDGBP performed similarly to AUDEUR, gaining strength in yesterday's session before fizzling out overnight to open today sideways at 0.6412. The FTSE 100 shared the global trend in equities upwards, gaining 0.4%. Overnight the UK's employment report was released and showed signs of concern with the number of welfare claims rising to the highest in a number of months, as well as an unexpected raise in the Unemployment Rate to 3.8%. Tonight another big piece of data is set to come out of the UK, with the CPI numbers which are expected to show some signs of easing from a painful previous figure of 10.4%

NZD

AUDNZD opens flat at 1.0830, despite moving around in an energetic 68 pips range. This morning's dairy auction in NZ showed the GDT Price Index came in at 3.2%, with prices for white gold improving on last fortnight's result. Fears of a recession still looms over our neighbor's ahead of their CPI q/q release tomorrow morning.