China's Inflation Data Due at Lunchtime Today

AUD

The Aussie dollar continues its soft start to the year, opening lower against the majors this morning amid risk-off flows and various geopolitical risks. A Quiet day on the news front yesterday for the Aussie dollar with only the Goods Trade Balance results which outperformed expectations driven by non-industrial transport equipment coming in at 11.44B from the forecast 7.50B. Asian equities on the other hand performed well with the ASX +0.5%, Shanghai Comp +0.3 and the Nikkei continuing its upswing +1.8%. Commodities saw mixed results with Copper +0.1%, Iron Ore -1.4%, Silver -0.9%, and Gold flat. Another quiet day for the Aussie with nothing set for release, however all eyes will be set on the CPI and PPI release out of China at 12:30pm with forecasts pointing to a decrease in both, which may cause some volatility in the Aussie dollar.

USD

The AUDUSD opens lower this morning at 0.6689 reeling off of the US CPI release overnight with Core CPI m/m meeting forecasts at 0.3% while CPI m/m saw an increase of 0.1, and CPI y/y rise 0.2 from forecasts. It is important to note that although the CPI results were on balance higher than expectations, they are not the Fed’s preferred method of gauging inflation as the Fed’s Mester reinforced the idea that it is still “too early” for a rate cut, and there needs to be more evidence before any further action is taken and USD was able to push AUD lower in the aftermath. Unemployment data also came through better than expected with results showing a drop in claims made with 202k claims compared to the expected 209k. Wall Street saw slight losses with the Dow Jones -0.1, S&P 500 -0.1%, and NASDAQ -0.1%. Overnight there will be some further important data out of the US with Core PPI m/m, and PPI m/m set for release with forecasts expecting an 0.2%, and 0.1% increase respectively.

EUR

The AUDEUR lost its 0.61 handle late last night opening lower this morning at 0.6096, even though Italian November industrial production fell 1.5% m/m, well below consensus at -0.2% m/m. The ECB Economic Bulletin also printed with Eurosystem staff expecting headline inflation to average 5.4% in 2023, 2.7% in 2024, 2.1% in 2025 and 1.9% in 2026. Eurozone equities were all in the red on the close with the DAX -0.5%, and the CAC -0.5%. No major news set for release out of the Eurozone today with only French Consumer Spending m/m, and French Final CPI m/m.

GBP

The AUDGBP falls further overnight opening this morning at 0.5232 which is 1 month lows. Late last night we had Housing Equity Withdrawal q/q come through lower than forecast at 21.8B from the previous 23.5B. UK equities were red into the close, with the FTSE -1.0%. We have a myriad of releases out of the UK today, however the main event will be the GDP m/m which is forecast to increase from -0.3 to 0.2%.

NZD

The AUDNZD fell heavily early in the morning before rallying to open lower at 1.0732. Our Kiwi neighbours released their Building Consents m/m for November 2023 which showed the seasonally adjusted number of new dwellings consented fell 11 percent, after rising 8.5 percent in October 2023. No further news set for release until next Tuesday with the NZIER Business Confidence.