Glacial Economic Growth in China Weighs on AUD
AUD
The Aussie dollar leads into the weekend down across the board against the majors, with underperforming China data taking the shine off the AUD. Asian equities came in mostly flat with the Nikkei remaining unchanged, and Hang Seng down 0.1% and the ASX closed -0.1% lower with utilities being the biggest laggard. In commodities, Copper was down -3.8% with Gold and Silver also posting minor losses. On the data front, yesterday we saw the MI Inflation Expectations come through at 5.0% which was actually higher than the previous month's reading of 4.6%, a trend which the RBA will be hoping against hope does not materialise in the official inflation figures next month. For now, the central bank is expected to leave the cash rate at 3.6% at next month's rate meeting. We also saw some mixed data out of China yesterday which shows the ongoing struggles China faces to reboot growth in its economy after the move away from its restrictive zero-tolerance Covid policy. China’s headline Consumer Price Index (CPI) easing to 0.1% YoY from 0.7% prior, versus 0.3% expected (very low), while the Producer Price Index (PPI) slides to -3.6% YoY compared to -3.2% market consensus and -2.5% previous readings. No further data to be released today.
USD
The AUDUSD again retreats from 0.6800 coming in at 0.6701 this morning on the back of some upbeat Aussie consumer inflation expectations, and softer China CPI/PPI data. Another mixed night on Wall St, saw the Dow Jones close -0.7%, S&P 500 -0.2%, and the NASDAQ +0.2%. We had some data yesterday which saw the US Core PPI m/m come in at 0.2% as expected, while the PPI m/m come in 0.2% compared to the expected 0.3%, also we saw a rise in the number of Americans filing for jobless claims as Unemployment Claims data come through with an increase of 22,000 jobless with a total of 264,000 claims, compared to the expected 242,000. We had some low to mid-tier data released early this morning with Mortgage Delinquencies at 3.56% compared to the expected 3.96%, we saw FOMC member Waller speak on Climate Change and Financial Stability, the Natural Gas Storage coming in at 78b as expected, and the 30-y Bond Auction come in higher than expected at 3.74|2.4. No further data to be released today, however early Saturday morning we have the Prelim UoM Consumer Sentiment which is expected to coming at 63.0.
EUR
The AUDEUR saw a slight decrease overnight opening at 0.6138, with European equities opening mixed yesterday with the CAC 40 adding 1%, while the DAX game in lower at -0.4%. ECB President Lagarde spoke yesterday reinforcing that the fight against inflation wasn’t over. We have some low tier data to be released later on this afternoon with the French Final CPI m/m to come through with an expected result of 0.6%.
GBP
The AUDGBP opens slightly lower this morning at 0.5354 in a relatively lacklustre trading session despite the Bank of England raising interest rates by 25bps as was expected. The vote was split with 7 in favour of a hike and 2 in favour of a pause, a result that was also expected by markets which could explain the lack of currency movements in the aftermath. The FTSE 100 performed well yesterday adding 0.5% despite the increase in borrowing costs that businesses will now face with the official cash rate now up to 4.50%. We have a myriad of data to be released overnight, the main focal point being the GDP m/m and Prelim GDP for Q1.
NZD
The AUDNZD opens flat this morning at 1.0642 despite a busy night which saw a drop to 6 week lows of 1.0590 before the recovering to current, more familiar levels. No major news yesterday apart from the FPI m/m coming in at 0.5% showing that food prices rose 0.5% in April. Some important data to be released in this afternoon with the Inflation q/q to be released, with the RBNZ hoping for a reduction in inflation from the previous quarter's measure of 3.30%.