Soft Chinese Data & RBA Pause Push AUD Lower
AUD
The Aussie dollar is down against all majors overnight. This descent was spurred on by twin factors of a worse-than-expected Caixin Services PMI from China, further displaying difficulties in the Chinese economy recovering, and an RBA interest rate hold. Although the hold was expected, the small chance of a raise was holding price up at the current level, once that chance was removed the AUD drifted lower. This was the last interest rate decision Governor Lowe will lead, as he steps down on September 17. Tomorrow, he will give a last speech titled “Some Closing Remarks” in Sydney. The outgoing governor hasn’t divulged much on his post-retirement plans, saying only that he’d work to get his golf handicap down to “single digits.” Major data out today (11:30am) is the Australian GDP q/q, predicting a +0.4% gain for Q2, after a + 0.2% in Q1. Any surprises around this data is likely to cause large price movements.
USD
AUDUSD pair lost 1.5% over the course of yesterday, opening up at 0.6378-, or 3-week lows given the cocktail of AUD weakness and USD strength. Overnight, the Federal Reserve’s Waller hit the wires saying that further rate hikes would be determined by incoming data and that currently this suggested there was no need to make an imminent change. This dovish tone did nothing to help the Aussie dollar to recover against the Greenback. Factory Orders m/m came in better than expected at -2.1%, versus the -2.5% expectation. Tonight, the ISM services PMI for August is expecting a further slowing in the pace of growth but is likely to remain in expansionary territory at 52.5. The Beige Book, the analysis the FOMC uses to make interest rate decisions, is being released tonight. FOMC member Logan also speaks in the early hours of tomorrow morning.
EUR
The Aussie dollar fell 1% against the Euro off the back of AUD weakness, before recovering around half of that, opening at 0.5945 this morning. The small recovery was pushed by worse than expected European service PMIs. Spanish, Italian, French, German Services PMIs all showing contractionary numbers and all coming in below expectation. Coming up for the Eurozone, German Factory Orders, expecting a drop from a 7% growth figure, to -4.3% for last month. EU Retail Sales m/m also print tonight, expecting minimal change.
GBP
A 0.8% fall for the AUDGBP pair sent this currency cross to 2-week lows of 0.5073 this morning. Minimal data from the UK this week. The Final Services PMI printed higher than expected at 49.5, versus the 48.7 expectation. Tonight, we have Construction PMIs for the UK printing, expecting a move from an expansionary number of 51.7 to a contractionary 48.7. The Monetary Policy Report Hearings occur tonight, whereby the BOE Governor and several MPC members testify on inflation and the economic outlook before Parliament's Treasury Committee.
NZD
A 0.4% loss for the Aussie dollar against our antipodean counterpart, seeing the AUDNZD falling to 1.0838 overnight. The AUD fall against the NZD is less pronounced as these two currencies tend to move similarly against the majors, the NZD also saw a 1% fall against the USD off the back of the Caixin Services PMI and RBA announcement data releases. Yesterday, ANZ Commodity Prices m/m for NZ were released, showing a -2.9% versus the -2.6% previous. The GDT price Index came out last night, showing a 2.7% gain, after -7.4% at last release. Upcoming is the New Zealand Manufacturing Sales q/q tomorrow morning.