AUD Flounders as Risk Sentiment Sours
AUD
The Aussie Dollar falls across the board, with a heightened risk sentiment squashing it against all the majors, fueled by escalations in the Middle-East conflict. Commodities took a hit on Friday with Oil dropping 1.7%, Gas dropped 0.1%, Gold was flat, Silver was down 1.1%, Iron Ore was down 0.3% and Copper managing to gain 0.2%. Asian Equities were mixed into the close, with the ASX closing down 0.6% and the SHANGHAI COMP closing up 1%. It was a quiet close to the week locally. At 12:30pm today we'll see Chinese CPI y/y and PPI y/y, expected to strengthen a little to 0.4% and -2.8% respectively. In Australia, our Cash Rate is set to be released tomorrow, with future markets only pricing in 2 bps-worth of a cut from the RBA. Given the weaker-than-expected Q3 GDP figure last week (+0.3% q/q) and the sharper-than-expected decline in Aussie wage growth, tomorrow's RBA Meeting Minutes and Press Conference could set the stage for an interest rate cut in the new year. Currently, a 25bps cut is expected in April.
USD
The AUDUSD takes a hit over the weekend, falling from further Middle Eastern tensions with the overthrowing of the Assad regime in Syria, dropping the pair to a 3-month low of 0.6372, opening this morning at 0.6394. An apparent turnaround in the US labour market also contributed to USD strength. Wall Street was mixed into the close, with the DOW JONES closing down 0.3%, S&P 500 up 0.2% and the NASDAQ up 0.8%. Friday night saw the release of a relatively strong US employment report, with mixed results. The economy added 227k jobs in November, up from a positively revised 36k and slightly better than expectations of 220k. The Unemployment Rate unexpectedly rose 0.1% to 4.2% though the participation rate fell 0.1% to 62.5%. Average Hourly Earnings rose 0.4% MoM and 4.0% YoY, both being 0.1% higher than forecasts. Economists believe the lift employment is due to hurricanes and Boeing strikes weighing heavily on last month’s report. Tonight, will only see Final Wholesale inventories m/m, expected to remain at 0.2%, with all eyes on this Thursday’s CPI figures, with the Core figure (this excludes volatile food and energy prices) expected to remain at 0.3% m/m.
EUR
The AUDEUR takes a hit over the weekend, with the pair dropping nearly 1% to reach a monthly low of 0.6038, opening this morning at a rate of 0.6055. European equities managed to finish in the green, with the DAX closing up 0.1% and the CAC closing up 1.3%. On Friday saw the Final Employment Change q/q come in unchanged at 0.2% with the Revised GDP q/q also unchanged, at 0.4%. German Industrial Production m/m came in lower at -1%, with expectations of a 1% growth from the previous 2%. Sentix Investor Confidence is set to be released tonight, expected to mildly increase from -12.8 to -12.4, with traders looking to this Friday’s interest rate decision from the European Central Bank. The Main Refinancing Rate is expected to be cut from 3.40% to 3.15%.
GBP
The AUDGBP continued to slide lower over the weekend, touching 4-month lows and flirting with the 0.50 barrier before opening this morning at 0.5011. The British equities saw small losses, with the FTSE closed down 0.5%. Halifax HPI m/m came out on Friday, growing to 1.3%, expected to increase from 0.2% to 0.3%. Looking forward, MPC Member Ramsden is set to speak tonight. The main event will be this Friday’s GDP m/m, expected to improve from -0.1% to 0.1%.
NZD
The AUDNZD opens the day flat, with the pair seeing a small gain on Friday, retracing in the afternoon, opening this morning at a rate of 1.0948. There was no news over the weekend, with no news set to be released until Wednesday where we will see the release of the Manufacturing Sales q/q.