US Inflation Data May Offer Comfort to the Fed
AUD
The Aussie dollar continues to be the worst performing G10 currency, opening mixed against majors this morning. We found no reprieve yesterday after the release of the Chinese CPI y/y, and PPI y/y which came through mixed, with CPI coming through better than expected at -0.3%, while PPI came through lower than expected at -4.4%. The ASX on the other hand crept up 0.4% on the back of financial stocks, while the NIKKEI was down 0.5%. Commodities also say a mixed performance with copper up 0.5%, Iron Ore up 0.1% and both Silver and Gold down 0.5%. Another quiet day for Aussie data releases with only the MI Inflation Expectations set to be released at 11am. We also have some more data out of China set to be released over the weekend with New Loans, and M2 Money Supply y/y.
USD
AUDUSD keeps its 0.65 handle to open flat at 0.6535 despite a small rally overnight. Wall St was weaker from the outset with the Dow and S&P falling from around flat to 0.5%, while the Nasdaq was more than 1% in the red. We do however have some major news set to be released late this evening, being CPI m/m, CPI y/y, Core CPI m/m and Unemployment Claims which will have major effects on the currency. Expectations on the inflation data are set to be low with pace of price increases easing, but not enough to get the Federal Reserve to retreat on its inflation fight. If the Wall Street consensus as gauged by Dow Jones is correct, the closely watched consumer price index will show a monthly increase of 0.2% for July and a 12-month rate of just 3.3%.
EUR
The AUDEUR opens lower his morning, dropping about 16 bps to open at 0.5953. European equities strongly rebounded from the previous day’s performance as the CAC and DAX were both up 0.5% and 0.7% respectively. No major news out the Eurozone today with only the ECB Economic Bulletin set to be released this evening.
GBP
The AUDGBP opens basically flat this morning, up about 7bps at 0.5137, after rebounding early this morning. The reprieve came after some poor performing RICS House Price Balance results which came through worse than expected at -0.53%. The FTSE on the other hand performed well, as it was up 0.8%. No news set to be released today.
NZD
AUDNZD opens basically flat at 1.0785 this morning. Little volatility was seen yesterday, despite Inflation Expectations q/q edging higher than the previous reading at 2.83%. No news for our Kiwi neighbours today, however, tomorrow morning we have the BusinessNZ Manufacturing Index, and FPI m/m set to be released.