AUD Digs in After A Tough Week
AUD
The AUD was able to stem the bleeding leading into the weekend, after suffering significant losses through the second half of last week, opening either up or flat against its major currency pairs this morning. Some gains in commodities lent some buoyancy to faltering Aussie rates; Iron gained 0.8%, Silver 2.5%, Gold 0.2% & Copper 2.3%. Asian equities had a calm Friday day with the Nikkei and Shanghai comp gaining 0.4% while Hong Kong was out with a public holiday. The ASX traded up 0.2% to finish the week down -1.7% as Materials and Financials recouped Thursday’s losses. First half of the week ahead looks light for Australian data, the first piece being building approvals m/m tomorrow, expecting a 2.3% increase on the previous -0.1%. Wednesday will be a major day with CPI y/y being released (expecting a rate of 6.4%), and Chinese PMIs.
USD
The Aussie dollar made a small 0.4% gain against the USD over Friday and the weekend, sitting at 0.6523 at market open this morning. A massive amount of US economic data was released on Friday night with the Fed’s main inflation indicator; the Core PCE Price Index m/m coming in slightly higher than expected at 0.4% (0.3% expectation). Durable Goods Orders m/m came in better much better than expected at +1.1% instead of the expected -1%, both of these figures further solidifying USD strength. Later the University of Michigan Consumer Sentiment also came in better than expected with the index figure being 59.2 instead of the expected 58.2. News over the weekend that President Biden and Speaker McCarthy saw confidence that a US debt-ceiling deal will be reached means risk on sentiment may be embraced further by markets this week. Wall Street gained across the equity indices off these stronger economic indicators over the weekend, with the S&P up 1.3%, NASDAQ up 2.2%, and Dow Jones 1%. A Bank Holiday in the US today for Memorial Day. CB Consumer Confidence is out on Tuesday night, ADP Employment Change and Unemployment Claims are out on Wednesday night.
EUR
The AUDEUR made minor gains over the Friday and weekend session, moving up 0.35% to 0.6080. With no data from the Eurozone on Friday or over the weekend, the Euro was moved mainly by exogenous factors and market reactions to the worse than expected data in the Thursday session. The DAX and CAC both gained 1.2% over the weekend. Germany and France both have a bank holiday. Later this week on Wednesday, we see German Prelim CPI m/m released expecting a decrease from 0.4% to 0.2%. The ECB financial stability review is also released on Wednesday. And CPI Flash estimates y/y on Thursday to see a fall in the consumer price index from 7% down to 6.3%.
GBP
AUDGBP sits flat this morning with at most a meagre 0.2% fluctuation around either side of the current rate of 0.5275. Bank of England Member Jonathan Haskell spoke at an event in Washington D.C. on Friday, with a presentation on the drivers of recent inflation and asses implications of UK monetary policy. The only hint about further interest rate decisions was the quote “if we do see evidence of more inflation persistence, we will tighten policy”. UK retail sales m/m printed better than expected on Friday evening, coming in at 0.5% versus the expected 0.3%. The UK also has a summer bank holiday they are observing today, with a few low tier pieces of data coming out later in the week, such as, Nationwide HPI m/m, Mortgage approvals, and Net Lending to Individuals m/m.
NZD
The AUDNZD continues its upward trend, moving up 0.5%, as it broke through the 1.0750 resistance level in the late hours of Friday night, opening at 1.0785 this morning. No data out as of Friday, but the hint that the Kiwis are coming to an end of their tightening cycle is contributing to Kiwi dollar weakness across the board. The NZDUSD pair has tumbled a massive 3.5% since the RBNZ rate hike announcement 4 trading days ago. Coming up this week are NZ building consents out tomorrow, and ANZ business confidence the day after on Wednesday.