Tonight's Federal Budget Expected to Pinch Pennys

AUD

The Aussie Dollar has started the week strongly across the board opening higher against the majors. Asian equities were mixed to open the week with the Nikkei down 0.7% while the Hang Seng added 1.2%. The ASX closed 0.8% higher with energy and mining stocks outperforming. Yesterday's data showed a nominal increase in the NAB Business Confidence survey, however Building Approvals for March showed a contraction on the previous month. Trade data for April will be released in China today, with strong export growth in March likely to prove unsustainable as it was driven by the unwinding of backlogs accumulated during the Covid lockdowns. Locally we have Consumer Sentiment data as well as Retail Sales figures for March. Tonight the 2023-24 Commonwealth Budget will be released. Monthly government finance data to March showed the underlying budget deficit was ~$20b smaller than expected in last October’s Budget as the budget has benefited from elevated commodity prices and the stronger-than-expected economic recovery.

USD

AUDUSD opened strongly following 6 consecutive days of bullish price action, closing at 0.6778 after briefly testing and failing in the 0.68s. A subdued session in financial markets saw all three US equity indices remain relatively unchanged on the day.  U.S. 2- and 10-year yields rose 7 and 9 bps respectively, while crude oil closed 2.1% higher at $72.10 a barrel. At 12:00am last night Final Wholesale Inventories m/m data came in better than expected at 0.0%. Tonight the NFIB Small Business Index will be released, followed by FOMC Member Jefferson to Speak on the lead up to tomorrow's key CPI data which has potential to unsettle the markets.

EUR

AUDEUR continued its way upward, retracing a fortnightly high of 0.6164. European equities opened the session with gains with the FTSE 100 adding 1% and CAC 40 +0.2%. Overnight data showed German March Industrial Production fell 3.4% m/m, missing expectations of -1.5%. Today the French Trade Balance will be released, forecasted to come in at -9.5B from a previous -9.9B. Following that, German Final CPI m/m to be released at 4:00pm forecasted at 0.4% followed by Italian Industrial Production m/m forecasted to come in at 0.2%

GBP

AUDGBP opened positively at 0.5373 after yesterday's Bank Holiday in Great Britain following the weekend's coronation. This morning, BRC Retail Sales Monitor y/y came in better than expected at 5.2% from a 4.7% forecast. This afternoon more low-value data is due with the Halifax HPI m/m data forecasted to come in at 0.2% as a lead indicator of the housing industry's health. Thursday's Bank of England interest rate decision is now looming large, markets still tipping a 25bps rate hike which would be consistent with the RBA, Fed Reserve and ECB's decisions last week.

NZD

AUDNZD was the only exception to yesterday's AUD strength, closing downwards at 1.06865. There was no data released yesterday, today or tomorrow.