UK Labour Data Presents Mixed Picture
AUD
The Aussie Dollar opens lower against all the major currencies due to Chinese economic weakness, based on soft inflation figures and an underwhelming stimulus package announced by the Ministry of Finance over the weekend. As a result, Shanghai Comp closed -2.5% while Nikkei and ASX closed at +0.8%. Commodities were weighed down by Crude Oil closing -3.8% and Natural Gas closing -2.0%. No major economic data was released in China or locally yesterday, with the next major event being Aussie monthly labour data at 11:30am tomorrow. Job growth is expected to increase by 25.2k in the previous month, which is lower than the 31.9k monthly average over the past year, potentially reflecting a cooler labour market. The "tight" labour market has been preventing the RBA from having a serious discussion about interest rate cuts while inflation remains too high. The Unemployment Rate will also be announced tomorrow and is expected to remain steady at 4.2%.
USD
The AUDUSD opens at 0.6698, steadily dropping overnight due to hawkish commentary by FOMC Members eliminating chances of a 50-point basis cut at the next Federal Reserve meeting. Wall Street also closed weakly with the Nasdaq -0.8%, the Dow Jones -0.5%, and the S&P 500 -0.4%. Last night saw the Empire State Manufacturing Index released much lower than expected, citing reduced business activity and lower availability of supply. This was counteracted by FOMC Member Daly mentioning that controlling inflation was still a main priority for the US Fed, instead of their previous comments that improving labour conditions was paramount. Unemployment claims will be released tomorrow night, alongside Retail Sales data.
EUR
The AUDEUR opens at 0.6151, dropping throughout the day yesterday mainly due to Chinese economic weakness. The European equities closed lower, with the DAX closing -0.1% and the CAC closing -1.1%. Last night had the monthly German ZEW Economic Sentiment released higher than expected, thanks to improving market conditions in the Eurozone. It will be a quiet day for the Eurozone today, with all eyes on their interest rate decision tomorrow night. Currently, financial markets are almost certain that the ECB will cut their key interest rate by 25bps to 3.4%. Any volatility will mainly be through ECB President Lagarde speaking at the accompanying Press Conference.
GBP
The AUDGBP opens at 0.5119, dropping from 0.5174 highs in the late afternoon yesterday. The FTSE closed -0.5%. UK employment data was released yesterday, with 40% more people than expected claiming unemployment benefits. However, this was countered by the Unemployment Rate dropping from 4.2% to 4.1%. The data presents a mixed picture for the UK's labour market, with employment down on the previous month but up from the same period in 2023. Overall, the data had a negative impact on the Pound, with British pay growing at the slowest pace in more than 2 years. The data will be welcomed by the Bank of England as it considers when to cut interest rates again. Today will see more important economic data from England, with the CPI y/y released at 5pm expected to drop to 1.9%, within the BOE’s target of under 2%.
NZD
The AUDNZD opens at 1.1047, trading between 1.105 and 1.1057 over the past 24 hours. The currency pair saw a jump to these current levels due to New Zealand inflation data releasing lower than expected this morning at +0.6% quarter-on-quarter (exp. +0.7%). This takes the annual CPI figure to 2.2%, being under the 3% upper target for the first time in three years.