Sentiment Shift Softens AUD
AUD
The Aussie Dollar opens mainly lower or flat against the majors as geopolitical tension and economic uncertainties weigh on market confidence. Asian equities ended yesterday in the green, with the NIKKEI 0.8%, SHANGHAI COMP 1.1% and ASX 0.1%. Commodities were mixed with Iron Ore 0.3%, Copper 0.1%, Gold -0.1% and Silver -0.4%. China had their Caixin Manufacturing PMI figure come in above expectations yesterday at 51.5 against expectations of 50.5. The reading showed China's factory activity expanded at the fastest pace in five months as new orders, including those from abroad, led to a solid rise in production, pushing manufacturers' confidence levels to an 8-month high. The reading also echoed Saturday's modestly strong production figures, suggesting a blitz in stimulus is finally trickling through the world's second-largest economy. Locally, we had our Retail Sales MoM come in 0.3% above expectations at 0.6%, doing little to support any case for an RBA interest rate cut before year-end. Markets are currently only pricing in 100% odds of a cut in July next year. Later this morning, we'll see Australia's Current Account. Tomorrow will be the main AUD event for the week, being our quarterly GDP figure, expected to post +0.5% growth.
USD
The AUDUSD pair opens lower at 0.6473 this morning as Trump warns against countries interested in using the BRICS currency by imposing tariffs which has raised fears or a trade war between US and China. Wall Street ended the day mixed, DOW JONES -0.2%, S&P 500 0.3% and NASDAQ 1%. The USD was also helped by strong data overnight as ISM Manufacturing PMI came in 0.9 above expectations at 48.4. Fed Member Waller also spoke last night and highlighted that he is still leaning towards a rate cut in December despite raised concerns about an uptick in inflation. Overnight, the US will have their JOLTs Job Openings ahead of Thursday morning's ADP Non-Farm Employment Change, ISM Services PMI and commentary from Fed President Powell.
EUR
The AUDEUR pair opens flat at 0.6167 after AUD weakness was countered by comments from European Central Bank Member Martins Kazaks suggesting he was in favour of further rate cuts. European equities were either flat or up, DAX 1.6% and CAC 0%. The Euro faced downward pressure yesterday as weak Manufacturing PMI data from all of Europe’s biggest economies came in below expectations. Their Unemployment Rate also remained unchanged at 6.3%. No major Eurozone economic data over the coming days. The highlight will be ECB President Lagarde testifying before the Committee on Economic and Monetary Affairs of the European Parliament, on Thursday morning.
GBP
The AUDGBP pair opens flat at 0.5113, having touched 0.5094 lows earlier this morning. The FTSE ended the day up 0.3%. Yesterday, Britain had their S&P Global Manufacturing PMI come out 0.6 below expectations at 48.6. Today, the UK has their BRC Retail Sales Monitor y/y which is expected to increase by 0.7%. Tomorrow, they have Bank of England Governor Bailey speaking as well as the UK S&P Global Services PMI.
NZD
The AUDNZD opens lower at 1.0994 this morning. There was no major data out of NZ yesterday. Looking forward, on Friday they have their Business PMI. The RBNZ are currently expected to cut rates again in Feb 2025.