Aus Wage Growth Expected to Outpace Inflation
AUD
A quiet 24h in terms of economic data has left the AUD at the whim of the markets, opening weaker against most majors, although stronger against the Pound given yesterday's rise in the UK Unemployment Rate. Asian equites finished the session in the red with the ASX -0.1%, Shanghai Comp -1.4% and Nikkei -0.4%. Commodities finished mixed with Copper -1.9%, Crude Oil +0.4%, Natural Gas +1.7%, Gold +0.1%, Silver +0.3% and Iron Ore flat. A fairly tame day for local data yesterday, only seeing the release of Westpac Consumer Sentiment (reading at 5.3% vs previous 6.2%) and NAB Business Confidence (reading at 5 vs previous -2) with little reaction from markets. Later this morning we'll see the Aussie Wage Price Index q/q. Markets have penciled in wage price growth of 0.9% q/q, 0.1% higher than previous readings and still above the yearly average. The slowing wage growth trend remains gradual, given the backdrop of sticky inflation and still-tight labour market conditions.
USD
The AUDUSD dropped steadily over yesterday’s session, losing around 40 basis points to open this morning at 0.6528. Wall Street saw a mixed performance with Dow Jones -0.5%, Nasdaq flat and S&P 500 -0.1%. Yesterday we saw an array of FOMC Members speak, with nothing much of note said to sway markets. Yesterday’s general downward trend can be attributed to flow on effects from USD strength from the US election. Looking to the night ahead, the key focus will be on the CPI report for October. Consensus expects another firm monthly reading of +0.2% and the core figure to grow +0.3% m/m and the y/y reading to tick higher from 2.4% to 2.6%. Fed Chair Powell has previously indicated the central bank expected a 'bumpy road ahead' in terms of inflation and that they'll like to see a few weaker CPI prints to confirm inflation has fallen sustainably.
EUR
The AUDEUR loses just over 20 pips overnight, opening this morning at 0.6149. European equities performed poorly yesterday, closing the session with the CAC losing 2.7% and DAX 2.1% lower. ECB’s Rehn hit the wires stating sluggish growth is expected to persist in Europe in the coming months, indicating economic outlook is looking dull for the eurozone. Yesterday we saw German ZEW Economic Sentiment fall short of market expectations of 13.2 at 7.4 while the Eurozone’s equivalent read 12.5, down from 20.1 the month prior. Looking to the day ahead, another quiet one for the Europeans as we only await the tentative release of the German 10-y Bond Auction.
GBP
AUDGBP opens higher at 0.5112 given further Pound weakness on the back of a rise in the UK Unemployment Rate, as well as slowing wage growth. British equities closed the session lower with the FTSE losing 1.2%. Unemployment for September beat expectations at 4.3% vs the expected 4.1% while the Jobless Claims Change for October printed at 26.7k vs an expected 30.5k. Average Earnings Index 3m/y also beat expectations of 3.9% at 4.3%. The BOE’s Pill noted last week’s rate cut didn’t signal the job was done, which likely attributed to the GBP weakening. Looking to the day ahead, not much out of the UK as we only await MPC Member Mann Speaking.
NZD
Despite briefly losing the 1.10 handle, the AUDNZD opens this morning fairly flat at 1.1024. Little in the way of data yesterday. This morning we saw Visitor Arrivals m/m read at 1.1% vs previous readings of -2.1%, no reaction from markets.