AUD Climbs on Bolder Chinese Stimulus Prospects
AUD
The Aussie Dollar opens stronger across the board, encouraged by the pro-growth signals from China's Political Bureau announcement yesterday. The Politburo advised they would adopt "appropriately loose" monetary policy next year as part of steps to support economic growth, and will implement a more proactive fiscal policy and step up "unconventional" counter-cyclical adjustments. In terms of data, China’s CPI release showed the inflation rate dropping to a five-month low of 0.2% year-on-year. Although weak demand is a common narrative, the fact of the matter is that it was mostly about food prices (food price inflation slowed to 1% y/y from 2.9% y/y). Asian equities started the week mixed with the Nikkei and Hang Seng +0.2% and +2.8% respectively, while the Shenzhen traded -0.2%. The ASX closed flat with consumer discretionary gains offset by losses from energy. Commodities saw a decrease in precious metals with Gold and Silver down -0.2, and 0.5%, while Iron Ore and Copper saw wins +1.1%, and +1.5% respectively. Domestically, the RBA Board will deliver its monetary policy decision today at 2:30pm, which is expected to hold at 4.35%. The data released since the previous Board meeting have been a little softer than the RBA had expected when it put together its November forecasts. Markets will be paying close attention to any hints at near-term monetary policy decisions.
USD
AUDUSD gained over 1% to open this morning at 0.6441 after China announced a further shift in monetary policy to spur growth. With the AUD being a CNY proxy, the AUD gained on the greenback last night. US equities remained lower, closing in the red with the Dow Jones -0.3%, S&P 500 -0.5%, and the NASDAQ -0.6%. No major pieces of data set for release over the next 24h with only NFIB Small Business Index later this evening at 10pm and Revised Nonfarm Productivity q/q, Revised Unit Labor Costs q/q. All eyes will be focused on the inflation data set for release later this week on Thursday morning.
EUR
AUDEUR opens higher this morning, rallying overnight after the Aussie strengthened off Chinese monetary policy comments, regaining its 0.61 handle to open at 0.6103. Eurozone equities closed mixed with the DAX -0.2%, while the CAC was up 0.7%. No major news set for release today with German Final CPI m/m set to remain the same at -0.2%, and Italian Industrial Production m/m set to increase from -0.4% to -0.1%. The ECOFIN Meetings will also be running all day today, however, the main focus this week will be on Friday with the Eurozone’s Main Refinancing Rate release, expected to drop by 25bps to 3.15%. The European Central Bank will also deliver a statement and press conference.
GBP
AUDGBP opens higher this morning at 0.5048 off of AUD strength and MPC Member Ramsdens speech stating that there was no room for complacency on economic stability. UK equities also closed higher with the FTSE +0.5%. No news set for release out of the UK today, with the main event this week being their GDP m/m released this Friday evening, expected to slightly increase from -0.1% to 0.1%.
NZD
AUDNZD opens higher this morning, rallying last night and regaining the 1.10 handle before falling off, only a little, to open at 1.0979. No news from our Kiwi neighbours recently, however, tomorrow morning we will see their Manufacturing Sales q/q. It will be a quiet week overall with their following data event being on Friday.