Souring Risk Sentiment Drags AUD Lower
AUD
The Aussie Dollar and other risk related assets were mainly weaker against the majors, the AUDNZD being the only outlier which made decent gains. Asian equities were mixed to end last week, the Nikkei finishing up +0.9% on the day while the Shanghai Comp fell -1.24%. The ASX ended flat, weak materials sector were offset by strength in Consumer Discretionary goods +0.63% and Real Estate +0.60%. It was a quiet end to the week in Australasian data, with no noteworthy releases on Friday and none to start this week either. Tuesday's RBA’s Monetary Policy Meeting Minutes will offer insight to the decision making process by the board's 25bp hike a fortnight ago, whilst a raft of Chinese data including Industrial Production will also dictate local sentiment come Tuesday. Later on in the week, Employment numbers will headline Thursday with the Unemployment Rate tipped to remain at 3.5%.
USD
The AUDUSD lost ground after a late round of data from the US which soured market sentiment, dragging the Aussie down to 0.6644 this morning. Wall St traded marginally lower into the weekend with the NASDAQ closing -0.4%, and the S&P 500 -0.2%. On Friday night, University of Michigan (UoM) Prelim Sentiment Survey for May posted at 57.7, down from 63.5 and below expectations of 63.0. At the same time, UoM released Prelim Inflation Expectations which showed consumers see prices climbing at an annual rate of 3.2% over the next five to 10 years, with costs anticipated to rise 4.5% over the next year. The combination of weaker sentiment and higher than expected inflation predictions put downward pressure on the AUD, which sank to 10 day lows. Tonight will see New York State Manufacturing Index which is set to decrease, with Retail Sales, Unemployment Numbers and Jerome Powell speaking to headline the remainder of the week.
EUR
The AUDEUR lost out too, even without meaningful data from Europe, the pair trading down to 0.6119 currently. European Equities finished the weaker stronger with the Eurostoxx up +0.2%, the DAX up +0.5% and CAC +0.4%. ECB Speaker Nagel voiced his support for further hikes up to and including September. French Final CPI came and went, posting at expectations of 0.6%, no reaction from markets. A quiet week on the calendar from Europe which features a few bank holidays, today starts off with German Buba President Nagel speaking whilst EU Economic Forecasts are also released in the evening.
GBP
The AUDGBP suffered a similar fate and lost roughly ~20bps to trade at 0.5335 this morning. On Friday afternoon, March UK GDP showed the economy contracted by -0.3% m/m, below market expectations for a flat growth outturn. The drop largely reflected a sharp fall in service sector output, which fell by 0.5%m/m and was mostly due to a decline across consumer-facing services activity where output fell 0.8% in March. Only a few major data pieces pending for release from the UK this week, with Unemployment numbers due Tuesday afternoon and Governor Bailey speaking
NZD
The AUDNZD gained some traction on Friday and picked up to trade at 1.0727 this morning. The RBNZ monetary conditions survey revealed on Friday that NZ’s inflation expectations declined over time, with two-year expectations dropping sharply to 2.79% from 3.30% prior, whilst average one-year inflation expectations fell to 4.28% vs 5.11% seen in the first quarter of this year. This sent the Kiwi on a downtrend and refreshed NZDUSD to fresh monthly lows. This morning's BusinessNZ Services Index came in at 49.8, lower than 53.8 but has not impacted markets. Slim pickings for data for the remainder of the week, only lesser tiered data.