AUD Strong Amid Quiet Start to Week
AUD
The Aussie Dollar reversed recent losses over the weekend, opening higher against most major currency pairs bar the NZD. Asian equities closed mixed on Friday with the ASX up a tad, Shanghai Comp +0.1% and Nikkei -0.3%. Commodities were also mixed on close with Crude Oil +0.4%, Natural Gas -2.8%, Gold -0.5%, Silver +0.1%, Iron Ore +0.4% and Copper -0.4%. Friday morning saw Governor Michele Bullock speak, emphasizing that the RBA “won’t wait for inflation to return to the midpoint of its 2-3% target before cutting interest rates”. The comment provides a hint on the central bank's reaction function and suggests rate cuts might begin this year - as markets currently expect. Still, Bullock reiterated that Australia's inflation fight 'is not over' and that the Cash Rate would need to remain at a 12-year high for some time yet. This was followed later by some mid-tier data out of China in the form of New Loans which hit record highs in January, beating the previous reading of 1170B at 4920B. We also saw M2 Money Supply y/y drop 1% to come in at 8.7%. A quiet day today with no data out locally and we observe the first day of Chinese New Year celebrations, meaning Chinese banks are closed until Monday February 19.
USD
The AUDUSD pair saw a modest recovery over the weekend, reclaiming the 0.65 handle to open this morning higher at 0.6516. Wall Street closed Friday in the green with Dow Jones +0.6%, Nasdaq +1.1% and S&P 500 +1.2% - reaching 5,000 points for the first time. A quiet period for the US with no data released over the weekend and no data out today. Things will start to pick up in Wednesday's early hours with the CPI print. The yearly figure is expected at 2.9% (prev. 3.4%), which would bring US consumer inflation within the Fed's target 2-3% range for the first time in nearly 3 years.
EUR
After getting close to losing the 0.60 handle last week, the AUDEUR pair has begun salvage losses opening this morning higher at 0.6046. European equites closed lower on Friday with the DAX -0.2% and CAC -0.1%. Some mid-tier data out on Friday night in the form of Germany’s final January CPI which matched expectations at 0.2%. We also had Italian Industrial Production m/m beat expectations of 0.8% at 1.1%. No data to be released until Tuesday’s ZEW Economic Sentiment and EU Economic Forecasts.
GBP
The AUDGBP pair opens slightly higher this morning, gaining around 20 basis points to open at 0.5150. British equities closed slightly lower on Friday night with the FTSE -0.2%. A quiet day on Friday with only MPC Member Mann Speaking. Nothing out today. Things will start to pick up tomorrow with BOE Gov Bailey speaking at 5am, followed by the Claimant Count Change and Average Earnings Index 3m/y in the evening.
NZD
The AUDNZD opens lower this morning, losing close to half a cent and touching 9-month lows of 1.0586 before bouncing up a tad to open at 1.0602. Nothing out on Friday, however, today RBNZ Gov Orr is due to testify on the November 2023 Financial Stability Report before Finance and Expenditure Committee. Tomorrow will bring the main Kiwi event for the week, being Inflation Expectations q/q.