Strong Labour Report Complicates Next RBA Decision
AUD
A mixture of strong local data and largely weak international data gave the Aussie dollar a much-needed lift overnight, opening up against majors this morning. Commodities were mixed into the close with Silver down 0.5% Gold down 0.1%, Copper up 0.6% and Iron ore up 0.8%. Asian equities kept green into the close, with the ASX up 0.5% and Shanghai Comp up 0.1%. Yesterday's Employment Change release arrived higher-than-expected with the economy adding nearly 65k jobs in the month. Although almost all were part-time positions (61.2k), these typically lead to full time roles over time, implying higher wages & opening the door to a more-hawkish RBA moving forward. The unemployment rate remained at a low 3.7%, further fueling hawkish possibilities from the RBA in the future. Crucial data from China later today, with Industrial Production y/y expected to increase to 3.9% from 3.7% and Retail Sales y/y looking to increase to 3% from 2.5%. Signs of growth from China could give Aussie a further lift, if the data lands above expectations.
USD
The AUDUSD opens slightly higher this morning, with the pair sitting in a choppy range for the past 24 hours, whipping from 0.6420 to 0.6460 as data was released last night, opening this morning at 0.6433. Wall St remained in positive territory approaching the close with the Dow Jones up 1%, while the S&P 500 and the Nasdaq were both up 0.9%. Core PPI m/m read as-expected at 0.2% from a 0.4%, PPI m/m rose to 0.7%, expected to be unchanged at 0.4%. Retail Sales and Core Retail Sales both read 0.6%, higher than the forecasts and Unemployment Claims came in at 220k, slightly lower than the expected 226k, but higher than the previous 217k. This data dump made for chopping trading last night. Tonight, we have Empire State Manufacturing Index and Prelim UoM Consumer Sentiment, both looking to show improvement.
EUR
The AUDEUR gained over 1% in the past 24h, smashing the 0.6 handle and sitting at a 44-day high, fueled by a 'dovish hike' from the European Central Bank to open this morning at 0.6049. The ECB Main Refinancing Rate was released last night, coming in higher at 4.50%, from a previous 4.25%, with expectations torn between a hike and a pause. The euro was sold in the aftermath with the ECB stating that this is the last hike of the cycle. European equites were green into the close off the back of the dovish remarks, with the DAX up 1% and CAC up 1.2%. Tonight, we have ECB President Lagarde speaking.
GBP
The AUDGBP opens much higher this morning, gaining 1% from yesterday’s open to midnight, opening today at 0.5188. British equities saw very strong gains, with the FTSE closing up 2% yesterday. It was a quiet news day for the Brits, with only RICS House Price Balance printing worse-than-expected at -68%. Although it is not market moving data, it adds to the picture being painted of the British economy and the struggles they are facing in the face of higher interest rates. There is no meaningful data out until next Wednesday, being their CPI data, with no expectations posted yet.
NZD
The AUDNZD had a strong day yesterday, starting slow in the morning before ramping up in the afternoon, flirting with the 1.09 barrier early this morning before easing off to this morning’s open of 1.0894. There was no data out of NZ yesterday, but this morning we have BusinessNZ Manufacturing Index, no forecasts, with it previously coming in at 46.6.