RBA's Dovish Hold Sends AUD Lower
AUD
The Aussie Dollar opens lower in the aftermath of yesterday's dovish interest rate hold from the Reserve Bank of Australia. Surprising no one, the RBA stood pat with the Cash Rate at 4.35%, where it has been since the 25bps hike last November, although the Board made significant changes to their communication in the Rate Statement. Notably, they removed the sentence flagging that “policy will need to be sufficiently restrictive until the Board is confident that inflation is moving sustainably towards the target range,” which had been present since last August. They also noted they are “gaining some confidence that inflation is moving sustainably towards target.” In the Press Conference, RBA Governor Bullock stated that “upside inflation risks have eased but not disappeared” and that there is no need for multiple quarterly inflation reports in order to make policy chances (the next quarterly inflation report is in January). Asian equities finished the day mixed, Shenzhen lead gains +0.7%, Nikkei +0.5 while the Hang Seng dragged -0.5%. Locally, the ASX closed in the red -0.4%. Commodities closed mostly flat with the biggest mover being Natural Gas at +1.3%. Tonight, RBA Deputy Governor Hauser is due to speak at the Australian Annual Dinner, in Sydney. Over the next few days, we may see Chinese New Loans and M2 Money supply y/y. Our last main event this week will be our Employment Change (expected 26.0k) and Unemployment Rate (expected 4.2%).
USD
AUDUSD opens weaker at 0.6378, hitting lows of 0.6365 overnight after the AUD slumped in the aftermath of yesterday's dovish RBA hold. Last night saw Revised Non-Farm Productivity q/q come in same as previous 2.2% and Revised Unit Labor Cost q/q come in 0.8% from forecast 1.3%. A relatively quiet session on Wall St. saw the Nasdaq trading -0.3%, the S&P 500 -0.2% and the Dow Jones unchanged late in the session. Tonight, in the U.S., CPI for November is scheduled for release, with consensus predicting another firm monthly core increase of +0.3% m/m. Disinflation has stalled recently, but economists are debating if this is a temporary blip that will soon give way to a softer trend. The consumer price report for November will be widely read for an update.
EUR
AUDEUR opens weaker this morning at 0.6060, having softened after the dovish RBA hold yesterday, then trading sideways throughout the evening. Last night, German Final CPI m/m came in unchanged and Italian Industrial Production m/m missed at 0.0%. The DAX and CAC both finished in the red at -0.1% and -1.1%. Not data out today for the Eurozone. Their next data event will be Italian Quarterly Unemployment Rate, however, all eyes will be turned to the ECB rate decision on Thursday night. The European Central Bank is anticipated to cut its key rate by 25bps to 3.15% in line with the ECB's broader strategy to achieve its 2% inflation target amidst weakening economic growth in the Eurozone.
GBP
AUDGBP opens significantly weaker, losing 1% throughout yesterday and opening today at over 4-and-a-half year lows of 0.4990. The FTSE closed yesterday in the red -0.9%. Overall, another quiet week for the Pound with monthly GDP the main event, on Friday evening. Economic growth is expected at +0.1% m/m following last month's surprise -0.1% contraction.
NZD
AUDNZD opens stronger this morning at 1.0994 after hitting highs of 1.1002 overnight. Manufacturing sales q/q came out this morning at -0.1% from 0.9%. There is not data out for the rest of the day and tomorrow. Out on Friday will have Business NZ Manufacturing Index and Visitor Arrivals m/m.