AUD Struggles After Disappointing Chinese Inflation Data

AUD

The AUD opens largely down against the majors, primarily due to disappointing Chinese Inflationary figures on Saturday. China’s CPI came in at 0.4% (exp 0.6%) and their PPI coming in at -2.8% (exp. -2.5%), the soft figures undermining some of the recent benefit AUD has enjoyed from Chinese economic stimulus announcements. In commodities, Crude Oil dropped 0.2%, Natural Gas flat, Gold +1.0%, Silver +1.2% and Iron Ore gaining 1.4%. Equities finished the week mixed with Shanghai Comp - 2.5%, Nikkei +0.6% and locally the ASX finished -0.1%. Today we will see Trade Balance out from China forecasting an increase to 651B from the previous 649B. Headlining events for the week ahead will be Aussie Employment Change and Unemployment rate on Thursday and China’s GDP, Industrial Production and Retail Sales figures out on Friday.

USD

The AUDUSD opens flat at 0.6739 despite underwhelming US economic results on the weekend. The PPI (producer price index) for September printed at 0.0%, meaning producers have seen no increase in prices over the month which could potentially flow downstream into consumer inflation numbers, reinforcing the disinflation story in the US. Adding to the lacklustre data, Preliminary UoM Consumer Sentiment Figures came in at 68.9, down on the expected 70.9. US Equities enjoyed the disinflationary tone of the data, closing in the green with the Dow Jones +1.0%, S&P500 +0.6% and the NASDAQ +0.3%. No news for today as it is a US Bank Holiday (Columbus Day). Key events for the week will be on Thursday with their Core Retail Sales, Retail Sales and Unemployment Claims to be released.

EUR

The AUDEUR hit weekly highs of 0.6177 over the weekend before retreating, opening this morning at 0.6157. On Friday we had German Final CPI m/m figures remaining unchanged (as forecasted). Eurozone equities gained with the DAX +0.8% and CAC +0.5%. It will be a quiet day today with no news expected to be released however tomorrow we will see German ZEW Economic Sentiment projected to increase to 10.2 from the previous 3.6. Thursday will be key with the release of Eurozone’s Main Refinancing Rate, Monetary Policy Statement and ECB Press Conference. Markets are currently expecting the ECB to cut interest rates by a further 25 bps.

GBP

The AUDGBP opens down at 0.5154 with the UK's GDP m/m figures released on Friday in line with forecast at 0.2% growth for the month. Equities saw slight gains with the FTSE +0.2%. Today we will have MPC Member Dhingra Speaking and Claimant Count change tomorrow expected to come in at 20.2k from the previous 23.7k. Key events of the week will be CPI y/y on Wednesday and Retail Sales m/m on Friday. Markets will be watching to see if the resilience of economic data releases is enough to warrant recent overtures from the BoE that supersized cuts are on the menu...

NZD

The AUDNZD pair opens lower at 1.1048 with little data out from our neighbours. This morning we saw BusinessNZ Services Index figures come out flat at 45.7. No news for tomorrow however on Wednesday we have NZ’s quarterly inflation figures expected to increase to 0.7% from the previous 1.4%.