Resilient Employment Data Delaying Projected US Rate Cuts

AUD

The Aussie Dollar opens mixed this morning after what was a volatile session on Friday night due to a swathe of high-impact economic data releases from the US and Europe. Asian equities also open mixed with the Hang Seng down -0.7%, Shanghai Comp -0.9% and Nikkei +0.3% whilst the ASX opens slightly down at -0.1%. On the commodities desk, Crude Oil and Natural Gas continue to soar amid the fears of a widening war in the Middle East, both opening at +2.4% and +3.8% respectively. Precious metals open up mixed, with Gold up +0.1%, Silver +0.7% and Iron Ore -0.7%. No data coming out for the AUD today, however tomorrow we’ll see Retail Sales m/m released at 11:30am, expected to increase by 1.4% to 1.2% from last month. The main volatility-inducing local events for this week are the Aussie CPI y/y released on Wednesday, and Chinese CPI y/y on Friday.

USD

The AUDUSD traded a volatile 1 cent range over Friday night across key data releases, opening only marginally higher this morning at 0.6712. Initially the USD gained strength off of multiple strong employment data releases – Average Hourly Earnings m/m coming in at +0.4% against expected +0.3%, Non-Farm Employment Change adding a solid +216K jobs against expected +168K, and Unemployment Rate remaining flat at 3.7% against the expected increase to 3.8%. This rally was short lived however, as 90 minutes later the ISM Services PMI printed worse than expectations, contracting to 50.6 against the expected 52.5 which resulted in the AUDUSD moves reversed. Wall Street closed in the green with the Dow Jones up +0.1%, S&P 500 up +0.2% and NASDAQ also up +0.1%. No data coming out of the US today, the big US data due for release this week on Thursday night which includes all-important CPI and Unemployment Claims.

EUR

The AUDEUR opens higher at 0.6125, off the back of slightly weaker CPI data from the Eurozone Friday night. Europe’s CPI Flash Estimate y/y missed at +2.9% against an expected +3.0%, whilst their Core CPI Flash Estimate y/y printed in-line with expectations at +3.4%. European equities closed in the red with DAX -0.1% and CAC -0.4%. Euro data starts tonight with some more benign data points in the form of German Trade Balance which are expected to remain flat, and Eurozone Retail Sales m/m expected to decrease from last month to -0.3%. This week sees various lower-tiered data to be printed, such as country-specific CPI’s, Trade Balances and Unemployment Rates scattered throughout.

GBP

The AUDGBP opens lower at 0.5268 following Friday night’s Construction and Housing sector data from the UK. Construction PMI showed another increase in construction activity, adding 1.3 points from last month to 46.8, whilst also beating expectations by 0.7 points. Adding onto positivity in construction data, their housing data also showed homes pricing increasing by +0.5% from last month, based on the Halifax HPI m/m data release of +1.1% against the expected +0.1%. GBP opens strongly as a result of the combination of positive data points. Onto the equities and the FTSE closed in the red at -0.4%. Major data releases for this week include Governor Bailey speaking on Thursday before the Treasury Select Committee, discussing the Bank of England’s Financial Stability Report, where ears will be hearing for any dovish or hawkish clues moving into 2024. Also on Friday we have the UK’s GDP m/m set to be released.

NZD

The AUDNZD opens marginally lower at 1.0750, with no data released over the weekend from our Kiwi friends. Similarly today we are not expecting any data either, however looking forward this week we’ll see the ANZ Commodity Prices m/m and Building Consents m/m to be released Wednesday and Thursday respectively.