Evidence of Easing in US Consumer Inflation
AUD
AUD opens the new financial year mixed against the major currency pairs after what was a volatile month of June. Asian equities also closed mixed on Friday with the ASX +0.1%, Shanghai Comp +0.6% and the Nikkei -0.1%. Commodities were mainly up with Crude Oil +1.1%, Natural Gas +4.4%, Gold +0.5%, Silver +0.7%, Copper+1.6% and Iron Ore -0.1%. Locally on Friday, we saw the release Private Sector Credit m/m, coming in bang on expectations of 0.4% and as expected had minimal effect on the AUD. Out of China on Friday we saw Manufacturing & Non-Manufacturing PMIs, Manufacturing PMI came in on expectation of 49.0 a slight improvement from a previous reading of 48.8 and the non-Manufacturing number read lower than both expectations of 53.7 and previous reading of 54.5, coming in at 53.2. Looking to the day ahead some mid-tier housing data will be released locally, main data piece to keep an eye on will be the Caixin Manufacturing PMI out of China. This week's main event will take place tomorrow in the form of the RBA’s interest rate decision, futures markets expect no hike as falling CPI figures paired with soft commentary from last month's meeting minutes may indicate a pause is on the cards.
USD
The AUDUSD began to see a revival late Friday night, opening close to half a cent higher this morning at 0.6661. Wall Street closed in the green with the Dow Jones +0.8%, S&P 500 +1.2% and NASDAQ +1.4%. On Friday in the US we saw Personal Income rose by 0.4% in May and Personal Spending rose by 0.1% in the same month which would indicate some degree of savings is possible. The main data on Friday showed the preferred gauge of inflation by the Federal Reserve, the Core PCE Index, showed a welcome reduction from the previous month, printing in-line with expectations of 0.3%. Additionally, there are signs of reduced momentum in spending, which should alleviate future price pressures. Tonight we will see the release of Final Manufacturing PMI, expected to remain at 46.3, as well as the ISM Manufacturing PMI and Manufacturing Prices.
EUR
The AUDEUR pair sees a slight lift over the weekend, reclaiming the 0.61 handle to open this morning around 20 pips higher at 0.6105. European equities closed higher on Friday with the DAX +1.3% and CAC +1.2%. Friday saw a series of low tier data come in mixed, with the highlight of the night being CPI Flash Estimate y/y and Core CPI Flash Estimate y/y. CPI came in just under the expected 5.6% at 5.5%, similarly Core CPI missed expectations of 5.5% at 5.4%. Today we will see a series of German, French, Spanish and Italian Manufacturing PMI’s.
GBP
Little movement in the AUDGBP over the weekend with little data to sway markets, opening flat this morning at 0.5243. British Equities saw some upside with the FTSE +0.8%. Friday saw the release of Final GDP q/q come in flat at 0.1%. Current Account missed an expectation of -9.8B at -10.8B. Nationwide HPI m/m and Revised Business Investment q/q both came in slightly better than anticipated. A quieter day ahead with only the release of the Final Manufacturing PMI, which is expected to remain flat at 46.2.
NZD
The AUDNZD pair sees a minor decline over the weekend, opening today at 1.0858 after having bottomed at 1.0842. Another quiet week ahead for the Kiwis, with little on the table in terms of data. This morning’s Building Consents data showed a continual decline of 2.2% m/m as firms and households grapple with higher borrowing costs.