US Inflation Eases Ahead of Tonight's Rates Decision

AUD

The recent Aussie Dollar rally has paused for breath this morning, with a mixed open across the majors as commodity prices eased. Asian equities were up across the board led by the NIKKEI gaining 1.8% and the Hang Seng up 0.6%. The ASX finished the day up 0.2%. Yesterday's local data showed NAB business confidence came in at -4, much lower than the previous 0, potentially showing that risk sentiment shifting in Australia. In China the New Loans data missed, coming in at 1360B, lower than the forecasted 1540B. With strong trade relations with Australia, lower Business spending in China can lead to less economic activity in Australia, which adds to the AUD negative sentiment. Today there is no data to be released from Australia, however tonight is the US Fed Reserve's interest rate decision (see below).

USD

The AUDUSD opens slightly higher today, having rallied from midday to briefly tease the 0.68s before giving up gains and opening at 0.6767. Wall St remained buoyant into the close with the Nasdaq +0.7%, the S&P 500 +0.5%, and the Dow Jones +0.3%. Looking to the data, the US CPI data showed disinflation which would be pleasing to the Fed Reserve; the yearly figure coming in at 4%, which was under the forecasted 4.1% and significantly lower than the previous moth's reading of 4.9%. The core CPI m/m was 0.4%, meeting expectations and the previous month’s reading.  These improvements in inflation increasing the possibility for a rate hike pause with the Fed Reserve's interest rate decision tonight, the cash rate currently sitting at 5.25%. 

EUR

AUDEUR opens slightly lower today, with a brief rally into the night, were it gave back all its gains and more into this morning’s open of 0.6270. European equities closed higher, with the CAC closed up 0.6% and the DAX made gains of 0.8%. The main piece of data that was released yesterday was the German ZEW Economic Sentiment, coming in at -8.5, better that the forecasted -13.4 and the previous reading of -10.7. German Final CPI m/m came in on target and the same as previous month’s -0.1%. This data shows despite bleak economic conditions, the sentiment appears to have bottomed. Looking forward it is a light day on data, with the most notable being the Eurozone Industrial Production m/m, forecasted at 0.8%.

GBP

AUDGBP opens lower today, with the pair moving sideways for most of the day, until midnight where it slid into today's open of 0.5366. Looking to the Equities, the FTSE gained 0.3% overnight. A few pieces of influential data was released overnight, starting with the Claimant Count change (UK's version of unemployment claims), coming in at -13.6k, much lower than the 21.4K expected and the previous reading of 23.4K. The Average Earnings Index 3m/y was 6.5%, higher than the previous and expected 6.1% and continues to show resilience in the UK labor force which would be pleaseing for the BoE. Overnight the BoE’s Greene said CPI could stay sticky and that it will be easier to get CPI down to 5% than 2%. Greene also noted that China may beat their 5% party growth target in 2023 while the MPC must proactively act on inflation.  Tomorrow the UK's GDP m/m will be released, expected to show growth of 0.2% from it’s previously contractionary state of -0.3%.

NZD

AUDNZD opens lower this morning, giving up the 1.10 handle and open at 1.0988. Visitor arrivals m/m came in at -16.9%, much lower than the previous -1%. The Current Account is -5.22b, better than the -6.95b expected and the previous -10.07B. Yesterday's weak Chinese data the most likely cause for the AUD's weakness here. There is only one piece being released today, being he FPI m/m, showing the how the cost of living is changing in New Zealand.