A Bump Appears in US Disinflation

AUD

The Aussie opens higher across the board propped up by a strong performance in commodities and a general softening of perceived geopolitical tensions. Yesterday just MI Inflation Expectations was released, showing consumers were forecasting a 0.4% decrease in inflation over the next 12 months from our previous reading. As aforementioned, commodities had a ripper day with Crude Oil +3.7%, Natural Gas +5.1%, Gold +0.8%, Silver +2.1% and Iron Ore +1.6%, each finishing in the green.  Asian equities found unison as they all finished stronger, with Nikkei +0.3%, Hang Seng +3.0% and Shenzhen +1.1%. Locally, the ASX ended +0.4% as materials outperformed. No data locally or out of China today, however over the weekend we’ll see Chinese CPI y/y and PPI y/y released. More importantly, our recent AUD strength bounced off of Chinese stimulus package talks, and at 1pm tomorrow China’s finance ministry will detail their plans of fiscal stimulus in a highly anticipated press conference. Markets are expecting more forceful policies as China attempts to batter growth back into their economy.

USD

AUDUSD opens higher at 0.6739 with strong commodity prices winning out over US inflation figures outpacing expectations overnight. US headline CPI rose 0.2% for the month, and core inflation by 0.3%. Both were 0.1 points higher than forecasts, showing US disinflation stalling over their Summer season. Unemployment Claims jumped to 258K (expected 231K), the most in more than a year. Despite the mixed result, markets have priced in stronger bets for a 25 bps cut in November. US equities had a muted reaction yesterday, with S&P 500 -0.3%, NASDAQ and Dow Jones both at -0.1%. As a follow up to US CPI figures, tonight we have PPI and Core PPI released, both expected to fall 0.1% from previous figures with PPI m/m at 0.1% and Core PPI m/m at 0.2%. 

EUR

AUDEUR opens higher at 0.6160 with little data out of Europe yesterday. ECB’s Monetary Policy Meeting Minutes showed mixed clues into another 25 bps cut in their meeting next Thursday. At the time of the decision, it was widely accepted by members to continue a very gradual and measured pace of rate cuts, preferring the next cut in December. Since then, in light of weak PMI and inflation figures in Europe, the October rate cut has been back in play. European equities remained relatively flat with DAX and CAC both -0.2%. Tonight we have the German Final CPI m/m expected to remain flat at 0.0% to give the ECB some further direction going into their next decision.

GBP

AUDGBP opens higher at 0.5151 with just housing inflation figures released yesterday, showing a slight increase with little market reaction. RICS House Price Balance grew by +11% for the month against a forecasted +9% increase. Like most other global equities, UK equities FTSE fell a slight -0.1%. Tonight the UK's economic growth is assessed, with GDP m/m expected to grow +0.2% ahead of the BOE interest rate decision early November.
NZD

NZD

AUDNZD opens flat at 1.1060 as strong commodities for our AUD was muted by stronger manufacturing figures out of New Zealand. This morning BusinessNZ Manufacturing Index continued to grow for the third consecutive month to 46.9, showing signs of the RBNZ rate cuts beginning to take effect. No figures out from now until Monday morning, when we’ll have the BusinessNZ Services Index released.