Friendless AUD Continues South
AUD
The Aussie Dollar continued its downhill journey overnight, opening lower against all the major currency pairs except NZD. Asian equities were mixed on close with the ASX -1%, Shanghai Comp -0.1% and Nikkei +0.4%. Commodities took a beating with Crude Oil -3.5%, Natural Gas -9%, Gold -0.2%, Silver-0.3% Iron Ore -0.3% and Copper going against the grain at +0.8%. No local data yesterday, however out of China we had CB Leading Index m/m (an index designed to predict the direction of the economy) fall from a previous reading of +0.3% to -0.6%, no reaction from the markets. Local data resumes today with the release of Retail Sales m/m which is expected to show minimal changes in April. In March, strong growth in food-related sales (specifically eating out and takeaway) compensated for the sluggishness in other retail sectors. Nevertheless, recent high-frequency bank transactions data indicate a decline in spending on food and dining out, while household goods spending continued to be lackluster throughout April.
USD
The AUDUSD pair continued its nosedive overnight, reaching 7-month lows of 0.6498 and not recovering much since, opening up this morning at 0.6503. Wall street was mixed at close with the Dow Jones -0.1%, S&P 500 +0.9% and NASDAQ +1.7%. US weekly jobless claims were better than expected with initial claims at 229k against expectations of 249k. Q1 GDP was revised up to 1.3% from 1.1%, whilst Prelim GDP Price Index q/q moved from 4% to 4.2%. The second round of US data saw April Pending Home Sales come in flat MoM compared to estimates of a 1.0% increase. No reaction to the data. Overnight headlines about the ongoing US debt ceiling negotiations with Republicans suggesting a deal today would be hard though President Biden said that he had had several productive conversations with House Speaker McCarthy and all had agreed that there will be no default. The steady stream of US data continues tonight with the Core PCE price index for April which is the Fed's preferred measure of consumer inflation. Other data pieces to keep an eye for include Durable Goods Orders m/m and Goods Trade Balance. There's a US bank holiday on Monday in observance of Memorial Day.
EUR
The AUDEUR pair drops over a percent since yesterday’s open as risk sentiment continues to sully, moving well back into the 60’s opening this morning at 0.6063. European equities were in the red with both DAX and CAC -0.3%. Some mid-tier data was released yesterday in the form of German Final GDP q/q which missed expectations of remaining flat at 0.0%, dropping 0.3%. The ECB’s Guindos also spoke saying wages and profits pose upside risks to inflation. Soon after, the ECB’s Nagel added the ECB will continue tightening to overcome high inflation. A data drought for the Eurozone begins with no data out today or the weekend, followed by a German and French bank holiday on Monday.
GBP
Although the AUDGBP opens lower this morning at 0.5278, the damage is minimal compared to other currency pairs. British Equities were lower with the FTSE -0.7%. A fairly quiet day for British data as we only saw the release of CBI Realized Sales which missed expectations of +10 to come in at -10 indicating lower consumer spending. This afternoon we will see the release of Britain’s Retail Sales m/m which is expected to claw back into positive territory, priced at +0.3% after a previous reading of -0.9%. There's a bank holiday in the UK on Monday.
NZD
The AUD has consolidated its gains against the NZD opening slightly higher this morning at $1.0731. An unusually quiet period for the Kiwis with no data out yesterday, none out today and nothing out till Tuesday.