Gov Spending Expected to Boost Aussie GDP
AUD
The AUD opens mixed against the majors, struggling to find clear direction over the past 24h with a lack of domestic data and no major shifts in global risk sentiment. The ASX closed +0.6% higher as health and consumer discretionary dominated gains. Asian equities ended the day all in green, led by Nikkei +1.9%, Hang Seng +1.0% and Shenzhen +0.1%. For commodities we saw Crude Oil +2.8%, Iron Ore +0.5%, Copper +1.5%, Gold +0.2% and Silver +1.8%. Today, we have our quarterly GDP expected to show 0.5% growth, up from the previous quarter's 0.2% growth and the strongest rate since Q1 2023. Rapidly rising government spending is expected to be the single biggest driver of economic growth for the September quarter. The GDP data that is released today definitely has the ability to move markets given the impact it may have on RBA interest rate expectations. Currently, no Aussie interest rate cuts are fully priced in until mid-2025.
USD
The AUDUSD opens at 0.6482, only slightly up from yesterday, despite US jobs data suggesting the underlying dynamics of the labour market bounced back in October. US Jolts Job Openings came in at 7.74M, slightly higher than expectations of 7.51M. The Labour department believes this 5% rise from previous employment figures could be a sign that the labour market could pick up job gains in the coming months. This adds to the recent narrative that the Fed is already backpedaling on the pace and depth of rate cuts after potentially misreading the labour market and jumping the gun with September's outsized 50bps cut. Wall St was generally mixed yesterday with the Dow Jones down -0.1%, S&P up a modest +0.1% and the Nasdaq +0.3%. Looking forward, we have ADP Non-Farm Employment Change out overnight which is forecasted at 152K, alongside the ISM Services PMI which is forecasted at 55.7. Also Fed Chair Jerome Powell is set to speak at the New York Times DealBook Summit. Frady evening's jobs report remains the key USD event this week.
EUR
AUDEUR opens flat at 0.6169, having traded a 0.5% range over the past 24h with further Euro volatility given French political instability. Yesterday, we had the Spanish Unemployment Change which fell by 16,036 people, after being expected to rise by almost 30,000. European equities opened strongly, CAC +1.0%, and DAX +0.5%. Today, we have Services PMIs for most major nations in Europe alongside the general Eurozone Final Services PMIs. Tomorrow, we have the ECB's President Lagarde speaking before the European Committee of Economic and Monetary Affairs. As per usual, her words will be listened to closely and any hawkish undertones could lead to the EURO strengthening as people are anticipating the ECB’s next moves regarding their monetary policy.
GBP
The AUDGBP opens flat at 0.5113 with little economic data released over the past 24h. Yesterday, we had the y/y BRC Retail Sales Monitor which came in at -3.4% missing forecasts of 0.7%. The FTSE closed up +0.6%. Tonight, we have Bank of England Governor Bailey set to speak in a pre-recorded interview as well as the UK Final Services PMI.
NZD
The AUDNZD opens slightly up at 1.1018. Yesterday we saw the Quarterly Overseas Trade Index come in at 2.4%, exceeding expectations of 1.2%. Looking forward we have ANZ Commodity Prices m/m at 11am as well as RBNZ Governor Orr to speak at midday at the 2024 Annual Review before the Finance and Expenditure Committee.