RBA's Hawkish Hold Supports AUD
AUD
The Aussie Dollar opens stronger ahead of the US election results today (results expected to filter through from the early afternoon), as the RBA held the Cash Rate with a mildly hawkish tone yesterday afternoon. Australia's Cash Rate remains unchanged at 4.35%, as the central bank's official statement insists underlying inflation remains too high, and recent job market figures suggest labour conditions continue to remain tight. The RBA currently doesn't see Trimmed Mean CPI falling to the midpoint of the 2% to 3% target range before 2026. Equities saw a mixed day, with Shanghai Comp and Nikkei being the winners at +2.3% and +1.1% respectively, whilst ASX finished in the red -0.4%. Commodities saw a quieter session with Gold, Silver and Iron Ore flat +0%, and Crude Oil +0.9% Natural Gas +0.2%. No further figures out of Australia or China today, with tentative releases of Chinese economic data tomorrow and Friday, namely their Trade Balance and total value of new loans issued. Both are expected to reflect slightly weaker from their previous readings, to show continued uncertainty in China after disappointing stimulus package detail releases from the last few weeks.
USD
AUDUSD opens higher at 0.6632 after a continued rally from commencement of the US Presidential Election (from yesterday’s lows of 0.6580). Polls still suggest a close race, so choppy conditions are expected into the evening. ISM Services PMI posted stronger than expected, in expansionary territory of 56.0 (2 points higher than expected), adding to the narrative that whoever wins the election will inherit an economy that’s growing, and has skipped a recession thanks to the efforts of Fed Chair Powell. US stocks also rallied, with Dow Jones +0.8%, S&P 500 +1.1% and NASDAQ +1.2%. Despite all eyes on the election today, markets are also closely watching the US Fed interest rate decision in the early hours of Friday, where they’re expected to cut by 25bps to 4.75%.
EUR
AUDEUR opens higher at 0.6071 off the back of our slightly hawkish RBA stance yesterday, with little data out of Europe. Equities finished higher, with the DAX and CAC +0.5%. The only notable data piece released yesterday was the French Industrial Production missing expectations at -0.9%, although markets are well-familiar with the facts of continued weakness in manufacturing across Europe. Europe's services sector has rebounded much faster than manufacturing, which will be confirmed tonight with a flurry of services figures from Germany, France, Italy and Spain, and finalised with an overall Europe Final Services PMI, expected at 51.2 (unchanged from previous).
GBP
AUDGBP opens flat at 0.5086 with a similar rhetoric to Europe (no major UK figures yesterday, however the Aussie continued to strengthen off the back of our RBA decision). Their services sector showed continue growth with Final Services PMI posting 52.0 against an expected 52.0. UK equities remained flat at -0.1%. Tonight we’ll see the final piece of UK data before the Bank of England interest rate decision on Thursday night, which will confirm a rebounding construction sector with Construction PMI expected at 55.3. The Bank of England is expected to cut by 25bps to 4.75%, with the surprise being 8 members expected to vote for cuts, and just 1 voting to hold. At their previous meeting the votes were inversed, with 8 voting to hold and 1 voting to cut.
NZD
AUDNZD opens higher at 1.1042 after some weaker-than-expected labour figures from NZ this morning. New Zealand’s Q3 Unemployment Rate ticked up by +0.2% to 4.8% (although expectations were 5%), and Employment Change q/q decreased by -0.5% against an expected -0.4% (and previous +0.2%). Markets don’t expect a change in expectations of a 50bps cut on November 27 from the RBNZ, although they’re not ruling out the possibility of a surprise 75bps cut either.