Eyes on China's Loan Prime Rates Today

AUD

The Aussie Dollar kicks off the week stronger against major currencies, while the ASX rallied +1.0% following a strong overnight lead on Wall St. Asian equities finished the day mixed with the Nikkei up +1.4% and Hang Seng -0.5%. At 12:20pm today, China’s 1-y and 5y Loan Prime Rates are expected to hold steady at 3.45% and 4.2% respectively, suggesting the People’s Bank is moderating but not attempting to reverse or arrest the yuan’s depreciation. Many still expect a cut in reserve requirements later this quarter. Australia’s Flash Manufacturing and Services PMIs on Wednesday morning will be the domestic highlight for the week.
 

USD

AUDUSD fell to 0.6571 lows in Saturday’s early hours before pushing back to kickstart the week at 0.6595. Another strong session for Wall St. saw the Nasdaq close +1.7%, the S&P 500 +1.2% (reaching 4842.07 – being the first record high in 2years – driven by tech sector enthusiasm) and the Dow Jones +1.1%. Prelim UoM Consumer Sentiment printed well-above expectations at 78.8 as Americans attitudes towards the economy continue to improve given slowing inflation. Light on the US data calendar over the next 24h, with Flash PMIs landing in Thursday’s early hours. In the back end of the week we’ll see weekly Unemployment Claims, quarterly Advanced GDP (exp. +2.0%, prev. +4.9%) and the Core PCE Price Index m/m (exp. +0.2%).
 

EUR

AUDEUR traded between 0.6067 and 0.6042 after hours before opening today at 0.6057. The DAX and CAC were down -0.1% and -0.4% respectively. European Central Bank President Lagarde spoke at the last of her three appearances at the World Economic Forum on Friday. She refrained from commenting on monetary policy given the ECB’s "blackout period" ahead this Friday’s policy meeting and interest rate decision. The central bank is expected to hold the rate at 4.5%, while Lagarde’s press conference will be importing in framing expectations moving forward. Currently, markets are pricing in an interest rate cut in April. Ahead of the ECB release, we’ll see Flash Manufacturing and Services PMIs on Wednesday evening.
 

GBP

AUDGBP briefly poked its head above the 0.52 handle on Friday before retracing a tad to open today at 0.5183. The FTSE was flat on the day, even though UK Retail Sales slumped -3.2% for the month (exp. -0.5%). A quiet day ahead for the Pound, with the key event this week being UK Flash Manufacturing & Services PMIs, on Wednesday evening. December’s reading showed the services sector expanding at a fast pace, while the manufacturing sector remained stuck in a slump. With inflationary pressures easing further, economists expect a slight improvement in both readings.
 

NZD

AUDNZD traded largely flat throughout Friday’s session to open this morning at 1.0773. Tomorrow morning will bring the BusinessNZ Services Index, while the week’s main event will be quarterly CPI, on Wednesday. The figure is expected to land at +0.5%, reflecting a slowdown in price pressures compared to the previous +1.8%. The Kiwi’s Consumer Price Index is widely expected to fall to 3.4% in 2024 (continued upside pressure due to an acceleration in rental prices), before dropping to 2.6% in 2025.