US Inflation Bump Spurs 'Trump Trade' Mindset

AUD

The Aussie Dollar opens either lower or flat against major currencies as Australin Q3 wage growth printed a little weaker than market expectations yesterday, although remained at the same rate as Q2. The quarterly Wage Price Index landed at 0.8% (exp. 0.9%), posing an inflationary risk to the economy. With Australia’s business and consumer sentiment rising, CPI “too high” for the RBA and now Trump preparing his cabinet for inflationary policies and potential trade wars, the RBA will be keen to see further progress with inflation and a loosening of the jobs market before entertaining the thought of a rate cut any time soon. RBA Governor Bullock will be speaking in a panel discussion at ASIC later this morning. We will also see key employment figures for Australia. The Unemployment Rate is expected to hold steady at 4.1%. The Employment Change is expected at 25.2k jobs added over the previous month, which would be below the 12-month average of 36.7k and well-below September’s monster 64.1k reading.  
 

USD

AUDUSD opens at 14-week lows of 0.6487, seeing a 1% swing after US consumer price inflation ticked up to 2.6% year-on-year, higher than the previous month’s 2.4% print. Stripping out volatile food and energy costs, the closely watched ‘core’ inflation index held firm at 3.3%. Despite all CPI readings landing exactly as markets expected last night, and futures markets upping expectations of a 25bps cut from the Federal Reserve in December, the uptick in inflation spurred a continuation of the recent ‘Trump trade’ mindset, with the USD reaching its strongest level since November 2023. This evening, we’ll see the US Producer Price Index (PPI) as well as weekly Unemployment Claims figures. Tomorrow morning, Fed Chair Powell is set to participate in a panel discussion at the Federal Reserve Bank of Dallas. Audience questions are expected, which ups the odds of USD volatility.  
 

EUR

AUDEUR opens a tad lower at 0.6140 with little meaningful Eurozone data released over the past 24h. The pair hit 0.6158 highs in the afternoon before steadily falling to 0.6131 lows in the early hours. The DAX and CAC each gave up around 0.1% on the day. This evening we’ll see Industrial Production m/m, providing insight into the Eurozone manufacturing, mining and utilities sectors (further shrinkage is expected). European Central Bank President Lagarde will also be speaking tomorrow morning.
 

GBP

AUDGBP opens about 0.5% lower at 0.5092 with the FTSE down -0.1%. We’ve seen little meaningful UK data since Tuesday, where the Unemployment Rate notably rose to 4.3%, with the Pound weakening in the aftermath. Wage growth also slowed, although still remains above the rate of inflation, which the Bank of England will keep in mind ahead of the next interest rate decision. No major UK data ahead of the GDP release, tomorrow evening, which is expected to post mild growth.
 

NZD

AUDNZD opens flat on yesterday’s open at 1.1029, having moved sideways throughout the day before falling to 1.0992 lows in the evening, then recovering ground. As per usual, quiet in terms of Kiwi economic data. This morning’s Food Price Index showed an -0.9% fall in prices over the previous month. Tomorrow morning’s BusinessNZ Manufacturing Index will be the highlight for the week.