RBNZ To Deliver 50 Basis Point Cut Today

AUD

The Aussie dollar is red across the board this morning, seeing a sharp drop midday yesterday following a lack-lustre Chinese press conference and weaker commodities with the exception of precious metals. Gold closed up 0.4% and Silver up 0.9% Crude Oil fell 4.1%, Nat Gas Fell 3.7%, Iron Ore fell 0.4% and Copper dropped 2.1%. Asian equities had a mixed day, with the ASX dropping 0.3% and the SHANGHAI COMP having another cracker day, closing up 4.6%. Midday yesterday China’s National Development and Reform Commission didn’t announce any additional fiscal stimulus, which weakened hopes of China man-handling their economy into growth, weakening the AUD. At one point the Hang Seng was down 10% during yesterday's trade. At 11:30am yesterday the RBA's Monetary Policy Meeting Minutes came out rather benign, with the minutes stating that economic data fell in line with predictions, but still showed a step down in hawkishness from the RBA. NAB Business Confidence saw a small gain from -5 to -2, raising to the long run average for the data piece. 11am today has RBA Assist Gov Kent set to speak at the RBA, which may give further clues into future policy.

USD

The AUDUSD opens the day lower, with the pair taking a half-cent plunge around midday yesterday, hitting a 3-week low and opening this morning at 0.6744. Wall Street had a positive day, with the DOW JONES finishing up 0.4%, S&P 500 up 1% and the NASDAQ closing up 1.5%. Last night was quiet for crucial data, with US trade balance performing as expected and 4 different FOMC members speaking. It was a common belief amongst FOMC members that inflation is on a steady path downwards, keeping in line with recent rhetoric and therefore failing to move the needle. Tonight, Crude Oil Inventories are set to drop from 3.9m to 2m and the FOMC Meeting Minutes will be released. These minutes will give some insight into the path the Fed is looking to take after their large 50bps cut 3 weeks ago, although effects may be muted as it will not account for the red-hot employment report seen last week, which has pushed any need for a speedy cutting cycle. Currently futures markets are pricing in a cut of 22bps for the Fed's next rate decision on 7th November.

EUR

The AUDEUR sees small losses in the past 24 hours, with the pair falling mid-day to a 2-week low, followed by a slow retrace overnight to open this morning at 0.6143. European equities were soft into the close, with the DAX down 0.2% and the CAC closing down 0.7%. Last night saw German Industrial Production m/m lifts to 2.9%, being the highest month of growth since March 2023. Tonight, will be quiet on the news front, with German Trade Balance set to be released, with an expected uptick in exports compared to imports.

GBP

The AUDGBP opens the day lower, following the trend of a sharp drop at midday with a light recovery overnight, opening this morning at 0.5149. British equities took a hit yesterday, with the FTSE closing down 1.4%. Yesterday saw the BRC Retail Sales Monitor y/y come in higher at 1.7%, expected at a 0.8%, continuing the trend of improving retail sales figures in the UK economy. It's a quiet week for UK data releases, with the next major data point being this Friday’s GDP m/m, looking to lift from 0.0% to 0.2%, with the British being unable to put together several months of meaningful growth since late 2021. Further poor performance may require the BOE to look at a faster cutting cycle to help stimulate their struggling economy.

NZD

The AUDNZD opens the day lower, with the pair shedding its recent gains steadily over the trading day, breaking backing under the 1.10 barrier, opening this morning at 1.0981. No news was released yesterday, however today at 12pm the RBNZ will release the Official Cash Rate. Future’s markets have near certainty that there will be a 50bps cut install, dropping the rate from 5.25% to 4.75%. Markets are also pricing in that their next meeting will also see another 50bps cut, making an upside risk to been seen with such a sharp drop already expected. The RBNZ Rate Statement released with the decision also provides a chance for volatility if the expected full 50bps worth of cuts are delivered.