AUS: Will Real Wages Rise for the First Time in 3 Years?

AUD

The Aussie dollar opens mixed after a relatively quiet day for all major currencies yesterday. Asian equities started the week in the red with the Hang Seng notably falling -1.6%, while the ASX traded -0.9% lower as Materials and Real Estate shed 1.7% and 1.2% respectively. Today will bring 2 key pieces of data: the Monetary Policy Meeting Minutes (from the RBA’s interest rate pause 2 weeks ago) and our quarterly Wage Price Index (Australia’s tight labour market remains a key concern in the fight against inflation). To China, the backdrop of softer activity data and continued concern for the property sector has seen the CNY sink to year-to-date-lows. Today will bring Retail Sales and Industrial Production which will likely create further ripples after our swell of domestic data.

USD

AUDUSD opens at 0.6487, down on this time yesterday although considerably up given the rate tanked in yesterday's mid-morning - bottoming at 0.6453. Wall St. started the week on a positive note with the NASDAQ closing +1.1%, S&P 500 +0.6% and the Dow Jones +0.1%. Tonight will bring Retail Sales data, which are forecasted to increase +0.4% m/m with Amazon Prime Day lifting spending, as well as vehicle sales and gasoline prices ticking higher. On the other hand, chain stores are reporting a significant downturn in sales, which could slow the y/y rate to a crawl in coming months. Regardless, markets are embracing the soft landing story given ongoing growth & continued weakness among inflation figures. We’ll also see the Empire State Manufacturing Index this evening, forecasted at -0.9, while FOMC commentary on Thursday is expected to exhibit hawkish undertones in the July FOMC Meeting Minutes.

EUR

AUDEUR opens this morning at 0.5948 after a quiet day on the data calendar yesterday. Tonight, we’ll see German ZEW Economic Sentiment data (a diffusion index based on surveyed German institutional investors and analysts) which may bring some volatility if largely off-expectations. Aside from this, a generally quiet week ahead for the euro.

GBP

AUDGBP opens flat at 0.5114 with nothing on the calendar yesterday ahead of a data-filled week. Two key data points may be pivotal for determining how much the Bank of England will hike at its next meeting, particularly given last week’s stronger-than-expected GDP figures raised expectations for further hikes. This afternoon will bring labour data, where the Unemployment Rate is set to remain at 4.0%, while the Claimant Count Change is forecasted at +19.6k, reflecting further unemployment claims from UK citizens. The BOE will be keeping an eye on the Unemployment Rate to gauge the possibility of further sizeable wage increases. Also, tomorrow afternoon we’ll see the UK inflation report where annual CPI is expected to have fallen from +7.9% in June to +6.7%. This is largely attribute to base effects as last year saw a sharp increase in fuel costs. The BOE is currently in a tight spot deciding on how much to hike at the next meeting.

NZD

AUDNZD opens lower at 1.0857 after yesterday’s BusinessNZ Services Index fell to 47.8. indicating the Kiwi services sector contracted further in July. No data today, while eyes remain on tomorrow’s RBNZ interest rate decision & Monetary Policy Statement. Expectations are that the central bank will keep rates unchanged at 5.5% not only for a second straight meeting, but wellinto 2024. After the interest rate announcement, the bank will deliver new forecasts in its quarterly Monetary Policy Statement, including an updated projection of where it expects the overnight cash rate to sit over the next three years. This may bring volatility to the AUDNZD pair.