AUD Awaits Chinese Data Dump Today

AUD

Increased geopolitical tensions in the Middle East have weakened the Aussie Dollar and erased the gains experienced in December. Asian equities ended the session mostly lower led by the Hang Seng’s -2.2%, whilst Nikkei fell 0.8% and the ASX retreated -1.1%. The Westpac Consumer Sentiment index dropped 1.3% to 81 from the previous level in December at 82.1, this comes despite an overall easing on rate rise fears. China is considering 1 trillion yuan ($139 billion) of new debt issuance under a special sovereign bond plan to support the economy. Notably, this is only the fourth such sale in the last 26 years- most recently in 2020 during the pandemic. No Aussie data today, although from China we'll see Industrial Production y/y, GDP q/y and Retail Sales y/y in the early afternoon. These top-tier releases often impact the AUD, if only temporarily.

USD

AUDUSD continues to open lower than the day prior at 0.6584, a continuous trend we have seen since Monday. The US Empire State Manufacturing Index printed well-below expectations at -43.7 (forecasted at -4.9), backing up the previous weak report, nearly half of New York manufacturers reported a decline in recent new sales figures, bringing about renewed recessionary fears. FOMC member Christopher Waller advocates moving “carefully” with rate cuts, acknowledging that interest rate cuts are very likely this year, with him also saying “As long as inflation doesn’t rebound and stay elevated, I believe the FOMC will be able to lower the target range for the federal funds rate this year". The Dow Jones trading -.9%, the S&P 500 -.6%, and the Nasdaq -.5% late in the North American session. Late this evening, we'll see US Retail Sales figures and the Industrial Production release. Retail Sales are likely to have grown solidly in December (exp. +0.4% m/m), with consumer confidence buoyed by rising equity indices, although markets still price circa-150 bps of cuts from the Fed later this year. We'll also see the Fed's Beige Book at 6am tomorrow, providing insight into the economic conditions that will guide the Fed's next interest rate decision.
 

EUR

AUDEUR has opened this morning at 0.6054, this is after a consistent downwards trend we have seen across the board since Monday morning. The German ZEW Economic Sentiment printed positively at 15.2, beating expectations of 11.6, showing that economic expectations for Germany have improved. Over to European equities, the CAC -0.2% and DAX -0.3%. No major data out for today, while ECB President Lagarde is set to speak on Friday in a panel discussion titled “Uniting Europe’s Markets,” and later in the day another discussion titled “The Global Economic Outlook.”   
 

GBP

AUDGBP continues the trend and opens down at 0.5209. The Claimant Count Change printed better than expected at 11.7K compared to the forecasted 18.1K. With the Average Earnings Index data showing up worst than expected at 6.5% instead of the expected 6.8%. The FTSE closed in the red with a -0.5% decline. Tonight at 6pm we will see the CPI y/y that is forecasted to drop 0.1%, from the previous 3.9%.
 

NZD

AUDNZD has opened at lower at 1.0729, whilst the same downwards trend was experienced across the board. The NZIER Business Confidence printed yesterday, indicating a slight improvement but still slightly pessimistic. With this morning the GDT Price Index coming in 1.1% better than expected, and the FPI m/m releasing early tomorrow.