US and EZ Inflation Data To Shape Movement Tonight

AUD

The Aussie Dollar opens this morning mixed across the majors, looking for direction a markets digest Wednesday's reduction in CPI. Gold and iron ore both had minor losses at -0.1% and -0.5% respectively and the ASX was up 1%. There was no local data released yesterday, however today the news to watch out for is China’s Manufacturing PMI and Non-Manufacturing PMI which are forecasted to be slightly expansionary at 51.6 and 55.0 respectively, misses in this could add mild volatility to the AUD currency pairs as markets keep a close eye on the Chinese recovery. Inflation data from the US and the Eurozone tonight (see sections below) will keep markets active into the weekend.

USD

AUDUSD opens at 0.6712 which is the best in a week, with key US data releases overnight missing expectations and opening the door for AUD to capitalise. US equities had a strong night with gains across the board, DOW JONES up 0.4%, S&P 500 up 0.5% and NASDAQ up 0.7%. To the US data, and Final GDP q/q had a slight miss of 2.6%, coming under the forecasted 2.7% on top of the Unemployment Claims being more than expected leading to USD weakness in the overnight session. Looking ahead, and tonight the Core PCE Price Index m/m, which is the Fed's preferred measure of consumer inflation and is tipped at 0.4%, down from 0.6%. This being a leading indicator of inflation may reveal how previous monetary policy is affecting the economy and gives clues as to how the Fed will approach potential interest rate hikes.

EUR

A different story with AUDEUR, opening slightly down at 0.6151, after a topsy-turvy last 24hrs. There was plenty of EZ data overnight, with German Prelim CPI m/m showing an increase of 0.8%, above the expected 0.7% and back in line with previous months result of 0.8%. Inflation is obviously proving persistent tin Europe's biggest economy which will not please the ECB. The ECB released their Economic Bulletin for March which noted inflation is projected to remain too high for too long, and the elevated level of uncertainty reinforces the need for a data-dependent approach to policy decisions. Markets expecting more interest rate hikes from the ECB which is likely to underpin EUR strength as other central banks deliberate pausing their own rate hikes. EZ equities were up with DAX up 1.3% and the CAC 1.1%. The data continues tonight with CPI data for the whole EZ, as well as ECB President Lagarde speaking over the weekend

GBP

AUDGBP opens slightly lower at 0.5420, in the absence of economic data following a similar trend to AUDEUR although to a less prominent extent. FTSE closed up 0.7% continuing the trend that we saw yesterday, showing persistent strength. There is a dump of data due from the UK tonight, the mot important of which is Final GDP q/q which is tipped to show 0.0% growth for the 4th quarter. Economic growth in the UK is flatlining in the aftermath of the post lockdown reopenings. Other data includes Current Account and House Price data. 

NZD

AUDNZD opens marginally lower at 1.0714, climbing to a high of 1.0763 during yesterday’s day session, but sliding to lows of 1.0705 where it has slightly recovered to today's open. Yesterday's ANZ Business Confidence continued to show a bleak outlook on the state of the economy from the business community. Inflation indicators continue to inch lower, going in the right direction, albeit painfully slowly. Perhaps the RBNZ will be the first to discuss interest rate cuts in coming months.