Aussie Dollar Stumbles After Weak Chinese Data
AUD
The Aussie dollar continues down across the majors, being dragged down by poor Chinese data. Metals followed suit with Gold down -0.1%, silver down -0.2%, Iron Ore down -0.4% and Copper leading the pack, down -1.6%. Asian Equities were mixed into the close while the ASX gained +0.4%. The Wage Price Index read lower than the expected 0.9%, although still gained 0.8% in the quarter. The Monetary Policy Meeting Minutes failed to provide surprise or alarm to the markets. Chinese data was very weak though, with the Industrial Production y/y being well-under the previous 4.4% and the expected 4.3%, reading 3.7%. Retail Sales was a similar story, reading 2.5%, well under the expected increase from 3.1% to 4.2%. This data shows continued Chinese weakness with no sign of relief for their economy, dragging down the Aussie dollar with them. There is no important data out today, with Thursday's Unemployment Rate release expected to show a 0.1% increase to 3.6%
USD
The AUDUSD pair opens lower today, with a brief rise in the early afternoon flirting briefly with 0.6520 before it continued its decent lower to today's open of 0.6458. Wall St was red into the close, with the Nasdaq and S&P 500 trading down 1.1%, and the Dow Jones down 1.0%. Last night there was mixed results for the data, with the Empire State Manufacturing Index reading lower at -19, from an expected -0.9 and a previous 1.1. Looking to Retail Sales m/m read higher at 0.7% from an expected 0.4% and previous 0.3% and Core Retail sales m/m also read higher at 1% from an expected 0.4% and a previous 0.2%. Positive retail data shows consumer sentiment is improving; however, the upstream manufacturing data shows that there may be delayed economic ramifications from the monetary policy tightening. Tonight, we have Building Permits looking to increase from 1.44m to 1.47m and Industrial Production increasing to 0.3% from -0.5%; with FOMC Meeting Minutes to be released early tomorrow morning, showing how split the FOMC was on the latest 25bp hike.
EUR
AUDEUR pushed slightly higher yesterday morning into the afternoon before a harsh drop in the early night to this morning’s open of 0.5923. European equities were soft into the close with the DAX down 0.9% and the CAC down 1.1%. The German ZEW Economic Sentiment read better than expected at -12.3, from an expected -15 and a previous -14.7. The Eurozone lacks crucial data for the remainder of the week, with the most influential being the Industrial Production m/m this evening, forecasted to decrease from 0.2% -0.1%.
GBP
AUDGBP finds no support, continuing to grind down into 3-year-lows, opening this morning at 0.5080. UK Equities had a tough close with the FTSE closing down -1.6%. The Claimant Count Change arrived much worse than expected, reading 29k, with an expected 19.6k after the previous 16.2k. This data is the first indication of the unemployment situation in the UK, showing the economic impact of the monetary policy tightening has been affecting the labor market. Average Earnings Index 3m/y read higher at 8.2% from 7.2%, with a forecasted 7.3%. This afternoon we have CPI y/y to be released, forecasting a decrease from 7.9% to 6.7%, with the UK’s inflation being some of the stickiest in the developed world, this would be a large relief if it reads on target.
NZD
AUDNZD pushed slightly lower after an unremarkable trading day yesterday, remaining in a tight range to open this morning at 1.0844. There was no data from NZ yesterday; however, 12pm today will bring the Official Cash Rate release, with expectations of the rate being held again at 5.5%. There is also the RBNZ Monetary Policy Statement, RBNZ Rate Statement and RBNZ Press Conference to be released alongside the rate at 12pm, with economists being fairly certain of no further rate hikes in NZ, any sign of hawkish commentary could strenghen the Kiwi dollar.