Chinese Growth Could Give Aussie a Boost

AUD

The Aussie dollar has lost little ground against majors over the weekend while the ASX put up +0.8% on Friday’s session as Communications and Mining stocks gained +1.7% and +1.4% respectively. There’s no domestic data today, although meaningful figures from China could impact the Aussie dollar. China’s economic growth is expected to have surged in Q2 (GDP q/y forecasted at +7.1%), although the figures are misleadingly inflated given the low base of comparison with pandemic-wracked 2022. At the time, sudden lockdowns, factory shutdowns and travel limitations resulted in China posting +0.4% on-year growth, with global markets still experiencing the ripple effects today. We’ll also see Industrial Production and Retail Sales data out later today, each expected to reflect further growth. Tomorrow will bring the most recent RBA Monetary Policy Meeting Minutes and we’ll also gauge the labour market on Thursday with some key employment figures.

USD

AUDUSD has gained 4% since the start of July, remaining near 1-month highs at 0.6835 after last week’s June inflation print furthered the disinflationary trend, edging the US dollar lower in what many economists believe to be an important market adjustment for H2 2023. A mixed session on Wall St on Friday saw the NASDAQ close down -0.3%, S&P 500 -0.2% and Dow Jones +0.1%. Another busy calendar for the US this week, showcasing Retail Sales, Industrial Production, Unemployment Claims and Manufacturing Indices. Tonight’s Empire State Manufacturing Index is expected to reflect slight deterioration in New York business conditions (headline figure estimated at -3.5), although it’s important to remember manufacturing index data frequently arrives well-off expectations, often bringing volatility and enabling businesses to take advantage of favourable rates.

EUR

AUDEUR has furthered its steady decline from Thursday evening’s 0.6161 high to open at 0.6088 in anticipation of what should be a quiet week on the European data front. Tonight, ECB President Lagarde will be delivering pre-recorded remarks at the ECB press conference in Frankfurt, while on Wednesday we’ll see Final CPI y/y for the Eurozone. The headline figure is expected to remain unchanged at +5.5%.

GBP

AUDGBP opens at 0.5221, slightly down from Friday, while the FTSE 100 posted +0.1% gains in the back end of the week. A busy week ahead for the pound, bringing CPI y/y, Retail Sales and key PMIs. Wednesday’s CPI y/y will likely turn heads, with the headline figure expected at +8.2%, down from last month’s +8.7%. The UK’s stubbornly high CPI has continuously beaten expectations this year, causing a headache for the Bank of England as Members seek to tame the core component (yet to peak). There may be a little reprieve for policymakers though, if Wednesday’s figure is on-expectations, the core component will likely drop (ever-so-slightly) to +7.0%.

NZD

AUDNZD opens at 1.0759 while the focus this week lies on Wednesday morning’s quarterly CPI data, expected at 0.9% , slightly down from the previous quarter’s 1.2%. If true to expectations, this would bolster the RBNZ’s view that NZ inflation is well-past its peak and further tightening may not be necessary.