US Pauses Interest Rate Hike Cycle

AUD

The Australian dollar opens higher against most of the major currencies this morning, only opening lower against our Kiwi neighbours. Asian equities were mixed on the Wednesday close with the Hang Seng falling 0.6% while the Nikkei added 1.5%. The ASX closed 0.3% higher with materials as the best performer. Commodities were also mixed with Cooper and Iron Ore up 0.7% and 0.9% respectively, while Crude Oil was down -1.0%. A busy day ahead for local data with MI Inflation Expectations, Employment Change, Unemployment Rate and RBA Bulletin set to be released later this morning. We also have a myriad of data out of China to look out for with the highlight to be the Industrial Production y/y, and Retail Sales y/y set to be released at noon.

USD

The Aussie remains strong against the Greenback opening higher once again this morning at 0.6799, seeing a rally early in the morning peaking at 0.6834, before readjusting lower to current levels. The USD was at four-week lows after sliding further in the lead up to the Federal Reserve interest rates decision, at which the FOMC decided unanimously to leave rates steady at 5.25% as expected was widely expected, preferring to pause until further data ibecomes available. The adjustments to the dot-plot signalled that borrowing costs will increase by another 50 basis points by end of December and the FOMC notes that deterioration to the labor market is expected. The USD strengthened in the aftermath in what is being labelled a "hawkish hold". In other data, Producer Prices come through last night declining by 0.3% in May. Wall St closed mixed with the Nasdaq 0.4%, the S&P 500 +0.2%, and the Dow Jones -0.7%. Later this evening we have some important data set to be released with Core Retail Sales m/m, Empire State Manufacturing Index, Retail Sales m/m, Unemployment Claims, Industrial Production m/m and Philly Fed Manufacturing Index being the highlights.

EUR

AUDEUR opens slightly higher this morning at 0.6274.  European Equities closed higher once again with the Euro Stoxx 50 up 0.8%, DAX adding 0.6% and CAC 40 +0.7%. We saw Industrial Production grow by 1% in the Eurozone doing better than expected of 0.8%. Tonight it is the ECB's turn to decide on interest rates, with markets expecting a 25bps hike which would take the rate to 4.00%. Over recent months, the tone of the ECB’s communications is consistent with the view that the policy rate is approaching its peak but is not there yet. The ECB has acknowledged the slowdown in Eurozone growth, which has been largely driven by weakness in goods consumption and manufacturing activity.

GBP

AUDGBP remains mostly flat opening 2 basis points lower this morning at 0.5365, rallying early this morning from lows of 0.5344. We had a bunch of data releases out of Great Britain yesterday with the GDP being the main one of note coming through as expected at 0.2%. Looking at Equities, the FTSE100 closed at 0.1%. No news out of Great Britain today, however overnight we will see MPC Member Cunliffe speak.

NZD

AUDNZD opens lower this morning at 1.0974, up from overnight lows of 1.0933. Earlier this morning we had the release of the GDP q/q which came through as expected at -0.1% which explains our late morning rally. No further news set to be released today, however tomorrow we have the BusinessNZ Manufacturing Index set to be released.