US Jobs Report Holds Key to Fed Cuts
AUD
The Aussie Dollar weakens as increasing tensions in the Middle East shift risk sentiment, weighing on the currency. We open lower against the USD and Euro, although a little higher against the Pound and NZD as they each weakened significantly over the past 24h. Asian equities move higher at yesterdays close with the ASX +0.1%, Nikkei +2% and the Shanghai Comp continues its upward momentum gaining 8.1% as the Chinese stimulus package continues to do its job. Commodities were mixed on yesterdays close with Crude Oil +5.3%, Natural Gas +4.6%, Gold -0.1%, Silver +0.7%, Iron Ore -0.9% and Copper -2.2%. A quiet day on the data front as China continues their bank holiday. Locally, we only observed the Goods Trade Balance which came in slightly above expectations with little impact on the markets. No data out today as we head into the Labour Day long weekend.
USD
The AUDUSD softened over yesterday’s session as shifting risk sentiment negates some mixed data releases, opening this morning around 35 pips lower at 0.6845. Wall Street saw a rather uneventful session, closing mixed with Dow Jones -0.4%, S&P 500 -0.2% and Nasdaq flat. Overnight, US weekly Unemployment Claims data was largely in line with expectations with initial claims at 225k (221k exp). The ISM Services for September printed at 54.9 as economic activity in the services sector expanded for the third consecutive month, with the USD strengthening in the aftermath. Tonight, we have the important US jobs report and although job openings remain above their pre-pandemic levels, it has shown a declining trend since March 2022. The latest data may offer clues on whether this downward trend is continuing to level off. The Non-Farm payrolls figure rose less than expected in August, providing further evidence of a cooling labour market. Further softening is expected in September, with the consensus forecast calling for 133k job gains. The Unemployment Rate is expected to stay unchanged at 4.2%. This release will shape expectations for near-term Fed policy as the central bank shifts its gaze from inflation to the jobs market.
EUR
The AUDEUR starts the day lower, just hanging on to the 0.62 handle opening this morning at 0.6203. European equities finished yesterday’s session lower with DAX -0.8% and CAC -1.3%. Yesterday, we saw a slew of mixed mid-tier data with Spanish, French and Eurozone Services PMI’s slightly higher than expected, German Final Services PMI remained flat and Italian Services PMI missed expectations. All having little effect on currency markets. A quiet day ahead, as we will only observe the release of the French Industrial Production m/m and Italian Retail Sales m/m.
GBP
The AUDGBP forged new 2-month highs overnight of 0.5228 before slightly cooling off this morning, but still opening higher at 0.5215. This comes after Bank of England Governor Baily indicated the bank could cut rates 'more aggressively' if needed. British equities saw a fairly subdued session, with the FTSE closing the day 0.1% lower. A quiet day yesterday on the data front, only observing their Final Services PMI which came in slightly under expectations of 52.8 at 52.4. Looking to the day ahead we will see the release of the Housing Equity Withdrawal q/q as well as the Construction PMI, markets expect a slight revision from 53.6 to 53.1. Tonight, we will also see MPC Member Pill Speak, due to deliver a speech titled "What’s next for the UK economy?
NZD
The AUDNZD starts the day at 6-week highs of 1.1010 as expectations ramp up for a 50bps cut from the RBNZ new week. A quiet day yesterday with only ANZ Commodity Prices m/m which fell from previous readings of 2.1% to 1.8%. No data out today or over the weekend, and nothing until next week’s RBNZ Official Cash Rate decision, on Wednesday.