RBA in No Rush to Ease
AUD
The Aussie dollar clung to gains yesterday as commodities pared a little of their recent losses and the USD paused its meteoric run. The RBA offered indirect support by reiterating that interest rates are unlikely to be cut soon and might even need to be raised under some circumstances. Other supporting factors include China reaffirming their trading relationship with Australia and the post-US election momentum cool off. The ASX closed +0.9% while Asian equities were also higher, with the Shanghai Comp +0.7% and Nikkei +0.5%. In addition, commodities were slightly lower overall – big movers were Natural Gas -3.3% and Coal -1.1%. It’s been a quiet week for economic data releases for Australia and China so far. Yesterday, RBA Meeting Minutes showed the Board would like to see a few consecutive weak inflation prints, and that a weak Q4 reading (released in Jan) likely wouldn't result in a Feb re cut. Today, China will announce their 1-year and 5-year Loan Prime Rate with no expectations of any changes. No other key economic data will be announced, however, RBA Governor Bullock is speaking on Thursday night.
USD
The AUDUSD opens at 0.6529, dipping to 0.6483 last night before recovering to current levels. The USD saw some volatility last night as the market lowered expectations of Trump imposing restrictive tariffs when he returns to the White House next year. Wall Street also closed slightly higher, with the Nasdaq +0.9%, the S&P 500 +0.3% and the Dow Jones -0.3%. No key data for the US has been released this week, with most countries focused on the G20 Meetings happening today. The next important data piece will be US Unemployment Claims, released on Friday 12:30am.
EUR
The AUDEUR opens at 0.6164, increasing overnight due to Euro weakness off escalations in the Russia-Ukraine conflict. European equities reacted similarly, with the DAX and CAC closing -0.7%. Yesterday, ECB President Lagarde spoke with muted impact on the market, with a repeat appearance tonight. Tonight will also have the ECB Financial Stability Review releasing at 8pm, with potential volatility depending on the central bank's assessment of the current financial system. No European data will be released on Thursday, with key Manufacturing and Services PMIs releasing on Friday night.
GBP
The AUDGBP opens higher at 0.5138 off the increasing strength of the Aussie Dollar. The FTSE closed slightly lower at -0.1%. Yesterday had the Bank of England’s Monetary Policy Report Hearings, with most Members reaffirming that the recent interest rate cut was based off improving inflation in England. The inflation relief could be short-lived, with tonight's CPI print expected to increase to 2.2% from the previous reading of 1.7%. If the reading lands on or above expectations, it would represent a jump above the BoE's 2% target and therefore bolster a cautious approach to cutting interest rates in the month ahead. The next key data release of the week will be Flash Manufacturing and Services PMIs on Friday 8:30pm.
NZD
The AUDNZD opens flat at 1.1041, trading sideways between 1.1030 and 1.1060 over the past 24h. No economic data was released yesterday. This morning had GDT Price Index released at 1.9%, down from 4.8%. Tomorrow will have Credit Card Spending y/y at 1pm.