US Consumers Keep Their Foot on the Gas

AUD

The AUD opens mainly up across the majors with key inflation data coming out in line with expectations having negligible effects on major currency pairs. Asian equities ended the day mixed, the Hang Seng and Shenzhen were -1.6% and -0.9% while the Nikkei closed +1.0%. The ASX finished weaker as consumer staples struggled, down -3.6%. Iron Ore and Copper readings came out fairly flat. Yesterday the CPI y/y came out at 2.1% which was lower than the forecast of 2.3%. However, underlying inflation, which is a more accurate figure removing any volatile price changes, came in at 3.5%, which is still above the RBA’s 2-3% target. This means the possibilities of rate cuts remain a story for next year. Today, we have Retail Sales m/m coming out at midday which is forecasted at 0.3% down from previous readings of 0.7%. 
 

USD

AUDUSD opens slightly up at 0.6570 despite strong employment figures from the US overnight. Yesterday, we saw the pair reach lows of 0.6544 before climbing and settling in the 0.6570’s this morning. Wall Street finished the day in negative territory with the Nasdaq and the S&P 500 both closing -0.3%. Last night, ADP Non-Farm Employment change came in much stronger than 110k forecasts, with 233k additional jobs being created for October as well as annual pay increasing 4.6% year-on-year, indicating hiring remains resilient and robust in the US. GDP figures showed US consumers kept their foot on the gas in Q3, with the US economy continuing to grow at a strong pace at 2.8% q/q annualized, with the main component driving this figure being consumption. Tonight will bring the Core PCE Price Index m/m (the Federal Reserves preferred inflation gauge), expected at +0.3%.
 

EUR

AUDEUR opened at 0.6051 after reaching peaks of 0.6078 before retracing and settling with strong inflation data out of Germany. Equities saw the DAX down -1.1% and CAC also down -1.1% German inflation data came out yesterday at 2.0% year-on-year, strongly up from 1.6% YoY in September. Tonight, we have Eurozone Flash CPI data, which is forecasted at 2.6%, the results of this will further weigh on the ECBs next rate decision in December.
 

GBP

AUDGBP opens up at 0.5068 after the UK Government unveiled their budget plans with billions in tax rises expected. The FTSE closed down at -0.7%. The Labor party stated that they would be making ‘growth oriented’ investment after warning painful decisions would have to be taken. Looking ahead, there are not may strong data pieces until the Bank of England's rate decision mid-next week.
 

NZD

AUDNZD opens slightly up at 1.1001 ahead of today's ANZ Business Confidence. The Business Outlook will be a key data point after a lift in confidence in September after RBNZ began rate cuts. Markets are watching to see if any more flow on effects come through from RBNZ rate cuts. Next week we have employment data out midweek.