AUD Plunges on GDP Miss

AUD

The Aussie Dollar fell off against the majors yesterday in the aftermath of weaker-than-expected GDP growth. Australia’s economy grew by 0.3% in the September quarter, and 0.8% year-on-year. The figure was largely boosted by government infrastructure projects and energy rebates, while households are largely spending less, and business investment remains subdued. The surprise reading brought forward expectations of an RBA interest rate cut to April 2025. Asian equities ended yesterday mostly weaker led by the Kospi, -1.4%, and the Shenzhen, -0.5%, with the Nikkei the only to find green, +0.1%. The ASX fell -0.4% with real estate the hardest hit, down -1.7%. No major data ahead of China’s inflation figures on Monday and the RBA interest rate decision, statement and press conference on Tuesday afternoon.
 

USD

AUDUSD touched 4-month lows of 0.6398 overnight before retracing a tad to open at 0.6428. ADP figures showed private sector employment grew by 146k jobs in November and annual pay was up 4.8% year-on-year – As expected. The ISM Services PMI printed at 52.1, meaning economic activity in the services sector expanded for the fifth consecutive month. Fed Chair Powell had little hard-hitting commentary, only noting it’s too soon to make policy decisions based on Trump’s tariff talk. The technology sector spurred Wall St. overnight and saw the Nasdaq trading +1.2%, the S&P 500 +.6% and the Dow Jones +.7%. Tonight will bring US weekly Unemployment Claims ahead of tomorrow evening’s main event for the week – The non-farm employment figures. US hiring is expected to have jumped in November after hurricanes and a major strike undercut job growth a month earlier. The Fed will be paying close attention to the labour market figures in considering whether they jumped the gun September’s 50bps interest rate cut.
 

EUR

AUDEUR starts the day lower at 0.6116 with recent volatility driven by French political instability as well as Australia’s relatively weak GDP figure. The DAX gained 1.1% yesterday and the CAC gained 0.7%. Overnight, European Central Bank President Lagarde indicated they will continue to lower rates, but can’t say at what pace. Tonight, we’ll see Eurozone Retail Sales figures. Overall, a quiet week in terms of Eurozone data. The Euro remains under pressure due to European political risk, weak business activity, the threat of trade wars as well as energy prices creeping higher (gas inventories are starting to come under pressure).
 

GBP

AUDGBP took a 1.5% hit in yesterday’s session, driven by AUD weakness on concerns of lackluster economic growth in Q3. The pair traded between 0.5116 highs and 0.5048 lows over the past 24h before starting today at 0.5049. The FTSE fell -0.3% yesterday. Overnight, Bank of England Governor Bailey hinted that four interest rate cuts could be in the pipeline over the coming year, if inflation continues to come down faster than the central bank had been anticipating. Markets are currently pricing in three rate cuts from the BoE next year, with investors expecting rates to be held steady at the December meeting. Tonight, we’ll see the UK Construction PMI, rating the relative level of business activity in the construction sector.
 

NZD

AUDNZD fell 0.5% from 1.1028 highs in yesterday’s session off the back of Australia’s weaker-than-expected GDP figure. The pair kick off the day lower at 1.0987. We have no major NZ data for the next two weeks ahead of the Kiwi’s GDP figure. The NZD will be at the whim of the markets and any shifts in sentiment & commodity prices would likely create some movement.