CPI Data to Kick 2024 Off This Morning

AUD

The Aussie Dollar continues to weaken, opening lower this morning against the majors, with December's Santa Claus rally firmly in the rear view mirror. Asian Equities closed higher with the ASX +0.9%, Shanghai Comp +0.2% and Nikkei +1.2%. Commodities were mixed with Crude Oil +1.9%, Natural Gas -2.9%, Gold +0.1%, Silver -0.6%, Iron Ore -1.7% and Copper-1.3%. Yesterday we saw the release of Aussie Building Approvals m/m which beat expectations of -1.9% at 1.6%. More importantly we also saw the release of Retail Sales m/m which also beat expectations of 1.2% at 2%, beating previous readings by 2.4% indicating a larger than anticipated increase in consumer spending over the holiday period which included the Black Friday sales. Looking at the day ahead we have one important local data release in the form of the CPI y/y which is expected to show a drop in inflation from 4.9% to 4.4%. It's worth noting that this yearly measure of CPI which is updated monthly is a relatively new data point and excludes a number of key services which are included in the traditional quarterly CPI figures. The more complete quarterly CPI figure for Q4 is due at the end of this month, and will more heavily guide the RBA's next interest rate decision on the first Tuesday of February.

USD

The AUDUSD pair lost grip of the 0.67 handle overnight, opening this morning lower at 0.6680. US Equities closed mixed overnight with the Dow Jones -0.5%, S&P 500 -0.2% and NASDAQ +0.1%. We saw only a few data releases out for the US overnight, nothing of major significance as NFIB Small Business Index slightly beat expectations of 90.7 at 91.9, RCM/TIPP Economic Optimism improved from 40 to 44.7 and US Trade deficit for November narrowed to $63.2B bio to beat estimates of $64.9B. Tonight we will see Final Wholesale Inventories m/m, Crude Oil Inventories and the 10-y Bond Auction.

EUR

The AUDEUR pair crept lower overnight, losing close to 20 basis point to open this morning at 0.6117. European Equites closed slightly lower with the DAX -0.2% and CAC -0.3%. European data, for the most part was stronger than anticipated with French Trade Balance improving from -7.9B to – 5.9B, Italian Monthly Unemployment Rate improved from 7.7% to 7.5% and the Eurozone’s Unemployment Rate fell slightly from 6.5% to 6.4%. In fact the only weaker-than-expected Euro data overnight was the German Industrial Production m/m, which was expected to grow 0.7% from -0.3% to 0.4% but instead fell to -0.7%. Not much on tonight with only the release of French Industrial Production m/m and Italian Retail Sales m/m.

GBP

The AUDGBP saw minimal movement and remained relatively flat overnight, opening slightly lower this morning at 0.5261. British Equities also remained fairly unchanged, with the FTSE only loosing 0.1% in yesterday’s session. A quiet day yesterday for the GBP, only seeing the BRC Retail Sales Monitor y/y which was expected to drop 0.3% from 2.6% but instead fell 0.7% to read at 1.9%. A lazy day ahead for the British with no data to be released today, however we do have BOE Gov Bailey expected to speak.

NZD

Completing a display of general AUD weakness, the AUDNZD pair also opens lower this morning, losing about 30 basis points in yesterday's session to open this morning at 1.0718. No data yesterday, however today we will see ANZ Commodity Prices m/m which previously came in at -1.3%, no forecast currently.