Minutes Show RBA Less Hawkish than Suspected
AUD
The Aussie slid substantially against the majors, a lot of the losses occurring following the release of yesterday morning's RBA Monetary Policy meeting minutes. The metals also offered no support for the AUD with both Silver and Copper down 0.2% and Iron Ore down 1.8%. The Asian equities fared slightly better with the ASX up 0.9%, but with the Shanghai Comp down 0.5%. Looking to the data, yesterday was lead by the Monetary Policy meeting minutes, which showed that there was a balance in opinions between rate hike and pause, being less hawkish then expected. The Board is clearly worried about overstepping the mark with rate hikes and "acknowledged the considerable uncertainty regarding the outlook for household spending and the financial stresses facing some households". Moreover, the Minutes noted that "there was a risk of the economy slowing and unemployment rising by more than expected" and that there were "significant risks and uncertainties to staying on the [narrow] path" embodied in the Bank's macro forecasts. Looking forward, it is a light day on news, with only the MI leading index m/m due later this morning in what is a very quiet week on the domestic data calendar.
USD
AUDUSD dipped a full cent from top to bottom yesterday, reaching a low of 0.6754 before bouncing back to its open of 0.6787 this morning. To the US equities, Wall St. was soft into the close with the Dow Jones down 0.7%, the S&P 500 down 0.5%, and the Nasdaq down 0.2%. Yesterday’s US data was better than expectations across the board, starting with NAHB housing Market Index coming in at 55, beating the expected 51 and the previous 50. Building Permits came out better than the expected and previous reading of 1.42m, coming out at 1.49m. This is showing growth in housing development in the US, which is an indicator for economical growth given the multiplier effect that construction work has throughout the economy. Tonight we have a marathon of Fed members hitting the wires with four separate FOMCE members speaking over 2 hours, kicking off with Fed Chair Powell. Plenty of opportunity for new insights into the mood inside the Fed towards longevity of the interest rate hiking cycle.
EUR
The AUDEUR pair fell from yesterday’s open, dropping the 0.62 handle at midnight, before a light rally to this morning’s open of 0.6211. The Eurozone equities had a poor day as well, with DAX down 0.6% and the CAC down 0.3%. Looking to the data, there was German PPI m/m released at -1.4% worse then the expected -0.7% and the previous month’s 0.3%. This may show that upstream inflation is cooling in one of the Eurozone’s largest economies. The Eurozone’s Current account was also released, coming in at 3.6B, much worse than the 27.3B expected and the 31.2B in the last readings. Today it will be a light day on data, with German 30-y Bond Auction and German Buba President Nagel Speaking, giving a speech regarding inflation.
GBP
AUDGBP saw a hard drop after yesterday's RBA Meeting Minutes, giving up about 1% before things steadied around today’s open of 0.5313. To the equities, the FTSE had a soft day yesterday, seeing a decline of 0.3%. There was no data released yesterday from the UK however tonight we get a flurry of of data releases, with the most influential being the CPI y/y which is expected to be 8.4%, a 0.3% decline from last month’s reading. Core CPI y/y is expected to say the same at 6.8%. Even if this much-needed drop in CPI is realised tonight, it is still unlikely that the Bank of England will decide to leave interest rates unchanged tomorrow night, markets all but sure of a further 25bps increase.
NZD
The AUDNZD pair has had a choppy ride, with a fall in the morning yesterday, dropping the 1.10 handle before lunch, before briefly regaining it before another fall, followed by a late night rally this morning to today’s open of 1.1008. There were two pieces of data released yesterday, being the Westpac Consumer Sentiment, coming in at 83.1, better than the previous 77.7. The other piece of data was the GDT Price Index, which was 0.0%, better than the -0.9% last month. There is no Data to be released today.