Today: RBA Set to Hold Rates Amid Slowing Inflation

AUD

The Aussie dollar opens mixed this morning in anticipation of this afternoon's RBA Cash Rate announcement. Asian Equities closed higher last night with the ASX +0.6%, Shanghai Comp +1.4% and Nikkei +0.7%. Commodities were mixed with Crude Oil +0.5%, Natural Gas -6.4%, Gold +0.2%, Silver flat, Iron Ore +0.6% and Copper -0.5%. Yesterday we saw some low-tier data releases in the form of ANZ Job Advertisements m/m which came in better than previous readings, as well as the Melbourne Institute Inflation Gauge m/m and Company Operating Profits q/q which both came in worse than previous readings, all having little effect on the already-struggling AUD. Looking to the day ahead, expectations are widespread that the RBA will leave its policy rate unchanged at 4.1%, with the majority of economists expecting no change and the market pricing in little chance of a hike. More broadly, several ‘soft’ data releases over the past month or so (including Q2 CPI, employment, and wages) has seen the market shift towards the view that the RBA’s tightening cycle is finished which does little favors for the AUD if the ECB and/or FED decide to hike rates at their next meetings.

USD

The AUDUSD pair sees marginal gains, opening at 0.6460, after the Aussie dollar attempted to regain lost ground during yesterday's US Labor Day Bank Holiday. Wall St saw nominal gains with the Dow Jones +0.3%, S&P 500 +0.2% and NASDAQ flat. No data out yesterday for obvious reasons, and an uncharacteristically quiet night ahead with only the release of the Factory Orders m/m (is expected to drop -2.5% following a +2.5% gain last month).

EUR

The AUDEUR briefly reclaimed the 0.60 handle yesterday, reaching one-month highs of 0.6006 before slightly dropping off and opening this morning flat at 0.5984. European equities closed slightly lower with DAX -0.1% and CAC -0.2%. The Eurozone saw some data misses over night with German Trade Balance arriving under expectations of 17.6B at 15.9B, Spanish Unemployment Change saw a big miss with expectations of -21.3k coming in at 24.8k and Sentix Investor Confidence missed an expected 19.6 at -21.5. We also saw ECB President Christine Lagarde speak at an economics event in London, where she avoided giving an indication of whether the European Central Bank will raise or hold interest rates next week. Tonight, we will see a string of low-tier releases, which are unlikely to have too much influence on currencies.

GBP

Lack of data releases spurred little movement for AUDGBP overnight, opening this morning slightly down at 0.5116. UK equities edged lower with the FTSE down -0.2%. This morning we saw the release of the BRC Retail Sales Monitor y/y which came in well-above expectations of 2.2% at 4.3%. A quiet one tonight with only the release of the Final Services PMI which is anticipated to remain flat at 48.7.

NZD

The AUDNZD pair tracked slightly higher over yesterday’s session, opening this morning at 1.0875. Yesterday’s Overseas Trade Index q/q came in slightly better than expected at 0.4%, little movement followed. Today we will see the ANZ Commodity Prices m/m released, there are currently no expectations and previous readings came in at -2.6%.