Chinese Inflation to Steer Aussie Dollar Lower?

AUD

The Aussie Dollar finds no relief yesterday, opening lower across most majors, with the ASX up a tad. Metals closed in the red across the board yesterday with Gold down 0.6%, Iron Ore down 0.2% and both Copper and Silver down 1.5%. NAB Business Confidence was released yesterday, showing improving conditions, reading 2, above the previous -1. Crucial data out of China today at 11:30am, with CPI y/y expected to read -0.4%, down from 0.0%, as China continues to struggle with deflationary pressures. PPI y/y is expected to increase from -5.4% to -4%. With China struggling to grow form harsh pandemic lockdowns, these poor economic readings from Australia’s largest trading partner will have a direct impact on how the Australian economy can grow, as well as AUD strength/weakness.

USD

AUDUSD fell hard yesterday morning, with the pair flirting with the 0.65 barrier before a light retrace to this morning’s open of 0.6538. Wall street had a rough close, with Dow Jones and S&P500 500 both down 0.4% and the NASDAQ down 0.8%. Looking to the news, FOMC Member Harker spoke last night, giving very dovish remarks, stating that the “Fed may be at a point where it can hold rates steady” and that “our forecasts is not that inflation might spike back up”, making further rate hikes seem unlikely. There was also US Trade Balance that came out at -65.5B, lower than previous -68.3B. Tonight we have Crude Oil Inventories, expected to raise from -17m to 2.1m, with markets in anticipation for the CPI data being released tomorrow, with Core CPI m/m and CPI m/m expected to remain the same at 0.2% and the CPI y/y to increase form 3% to 3.3%.

EUR

The AUDEUR opens flat this morning, with the pair falling from yesterday’s open to the afternoon, were it began it’s overnight retrace to 0.5968. European equities closed in the red yesterday, with the CAC down 0.7% and the DAX down 1.1%. Looking to the news, German Final CPI m/m read 0.3%, in line with forecasts and last month's reading. French Trade Balance came in higher at -6.7B, above the expected -8B and the previous 7.9B. Tonight we have only one piece of data from the Eurozone, being German 10-y bond auction, which is not expected to shift markets.

GBP

The AUDGBP grinds lower since yesterday’s open, finding no support to take it from these near 3-year lows; it opens this morning at 0.5128. Looking to the equities, the FTSE found no relief, closing the day down 0.4%. To data, BRC Retail Sales Monitor y/y read 1.8%, down from the expected 3% and the previous 4.2%. Today, there is no meaningful data that will be affecting the market, with the next important piece being the GDP m/m being released on Friday; expecting to show growth from an economy that has been in a contractionary state.

NZD

AUDNZD opens higher, with the pair going sideways from yesterday morning to midnight, were it lightly rallied to this morning’s open of 1.0788. Today will bring Inflation Expectations q/q from the RBNZ (survey of business managers) to be released at 1pm, previously coming in at 2.79%, with no forecast posted. The figures have been steadily dropping since late last year.