US Debt Deal Done, AUD Rides Market Confidence Higher
AUD
The Aussie dollar opens higher against the majors, having finally shown some resilience after what has been a woeful trading week. Asian equities had a mixed day yesterday with the NIKKEI up +0.8% while the Hang Seng failed to recover ground on yesterday closing -0.1%. The ASX started the month quietly gaining a modest +0.3% in the morning and remaining firm lead by healthcare stocks +1.2%. Commodities had a choppy day, Iron Ore gaining +3.1%, Nickel losing -2.1% while Ags were broadly up half to one percent. Retail Sales data yesterday showed the third consecutive month of 0.0% growth which is no surprise with higher cost of living pressures as a result of higher interest rates. No news on the Aussie to be released today, with the next RBA interest rate decision looming large on Tuesday.
USD
The AUDUSD has improved to 10-day highs opening this morning at 0.6754 after weaker US data and some signals indicating the FED may skip the June rate hike. The Greenback was on track for its worst daily loss in nearly a month yesterday as we saw weak US PMI manufacturing data coming in at 48.4 down from 48.5, and ISM manufacturing printing at 46.9, down from 47.1. Alongside the weaker manufacturing data. We also had the US ADP Employment for May showing 278K jobs were added for the month, down marginally from the prior 291K but still well above the expected 170K. Jobless Claims were marginally better than expected with initial claims at 232K, compared to the forecast 236K. Fed’s Harker became the latest official to indicate rates would be on pause in June when he said that rates were very close to being in restrictive territory and it was “time to hit the stop button for one Fed meeting”. Wall Street rebounded opening with the Nasdaq gaining 1.3%, the S&P 500 gaining 1.0% and the Dow Jones gaining 0.5%. Tonight the official monthly employment report is set for release in the US and could keep the recent volatility going.
EUR
The AUDEUR also touched 10-day highs, having moved steadily higher to reclaim the 0.61 handle, opening this morning at 0.6110. Yesterday we had the European preliminary CPI for May read +6.1% against an expected +6.3% y/y and core +5.3% vs an expected 5.5% y/y. The ECB will be pleased with these results which show a much needed cooling of the overheated European economy. As one would expect, European equities enjoyed the inflation miss, closing strong yesterday with the DAX and Euro Stoxx both gaining +1.1%. A quiet finish to the week with only French Industrial Production m/m and Spanish Unemployment due for release.
GBP
The AUDGBP tracked slowly higher in the last 24hrs, opening higher this morning at 0.5246. The FTSE closed up in what was a good session for global stocks with general sentiment on the improve. To the data, and the House Price Index showed a contraction in the value of house prices by 0.1% in May. The Manufacturing PMI surprised to the upside, printing at 47.1 which also improved on the previous month's reading. No data due now until next week.
NZD
The AUDNZD continues to rally, opening higher at 1.0833 and having gained almost 3 cents in the last 10 days. Early Kiwi data this morning showed the Terms of Trade Index coming in at the expected -1.5%. Another quiet day in terms of data, no other data of not set to be released, alongside with the Bank Holiday for New Zealand on Monday for the King's Birthday.