AUD Under Selling Pressure
AUD
The Aussie Dollar softened over the past 24h, experiencing selling pressure despite no major shifts in global risk sentiment, minimal economic data releases and a mixed performance across commodities which saw Gold-0.1%, Silver +0.7%, Crude Oil -3.1% and Iron Ore +0.2%. The ASX closed +0.3% as real estate and healthcare lead gains. Asian equities finished the day mixed, Japan’s Nikkei upbeat +1.3%, while the Hang Seng and Shenzhen ended -0.4% and -0.5% respectively. We will have to wait until January to see the Reserve Bank of Australia’s preferred quarterly inflation figures, so for now we will have to suffice with the monthly read, set for release tomorrow morning. Tomorrow’s print will likely shape expectations for the quarterly print and therefore impact the Aussie Dollar. A 0.3% month-on-month increase is expected following a past four months of reductions. Markets are now only fully pricing in a cut from the RBA in July next year, with 90% odds priced in by May.
USD
AUDUSD opens lower at 0.6501, having given up intraday gains to 0.6549 yesterday. A positive start to the week on Wall St. saw the Dow Jones trading +0.9%, the S&P 500 +0.2% and the NASDAQ +0.1% entering the final hours of trade. No US data on the calendar for yesterday or today. Looking ahead in the Thanksgiving-shortened week, the highlights will be tomorrow’s release of the Federal Reserve’s November FOMC minutes (where the central bank cut rates by 25bps) and Thursday’s release of the Core PCE deflator for October. The latter is expected at a sticky 0.3% month-on-month and will likely keep markets guessing over whether the Fed will cut in December after all.
EUR
AUDEUR made steady declines since late-morning on Monday, having travelled from 0.6248 highs then to 0.6186 lows earlier this morning before kicking off the day at 0.6194. The DAX gained +0.4% yesterday while the CAC remained flat. Last Friday’s soft PMI releases, especially the drop in the services component, continue to weaken the Euro. The view remains that there is no fiscal cavalry coming in the Eurozone and that the only way to address the current malaise is for the European Central Bank to cut rates more quickly than usual. Markets are currently pricing in 37bps of easing at the December meeting, torn between a 25bps or 50bps cut. No major Eurozone data set for release today. Tomorrow, we’ll see preliminary inflation figures for Germany.
GBP
AUDGBP opens lower at 0.5161, having touched 0.5165 lows overnight. The FTSE gained +0.4% in yesterday’s session. Overnight, the Bank of England’s Lombardelli warned policymakers should press ahead with interest rate cuts carefully amid concerns that UK wage growth and inflation will not drop away as quickly as hoped. Tonight, we’ll see sales figures from UK wholesalers and retailers. Overall, another quiet week for the Pound with the main event being BoE Governor Bailey’s speech on Friday evening.
NZD
AUDNZD opens lower at 1.1121 after yesterday’s NZ Retail Sales figures showed a -0.1% contraction quarter-on-quarter, being stronger than -0.5% expectations. No other Kiwi data ahead of tomorrow’s Reserve Bank of New Zealand interest rate decision, Monetary Policy Statement and Press Conference. The RBNZ is expected to cut the Official Cash Rate by 50bps to 4.25%. The economy has stalled and inflation is slowing more rapidly than predicted, driving policymakers to return the benchmark rate to a more neutral level that no longer constrains growth.