Sticky US Inflation Affirms Fed's Caution

AUD

The Aussie Dollar sees a harsh fall over the past 24 hours, opening lower against all the majors, with commodities following suit, with Gold down -0.1%, Silver and Iron Ore both down -0.3% and Copper down -0.5%. The Asian equities were mixed into the close, with the ASX closing down -0.1% and the Shanghai Comp closing up 1.3%. There was Westpac Consumer Sentiment released yesterday, coming in higher at 6.2% from -1.3% and NAB Business Confidence also came in higher at 1, previously at 0. China is still enjoying the Spring Holiday and there is no data to be released locally today. The next piece of data will be the Employment Change and Unemployment Rate on Thursday. The Unemployment Rate is expected to increase from 3.9% to 4.0% as businesses cut back on expenses and still-high levels of immigration.
 

USD

The AUDUSD falls off a cliff overnight, dropping over a 1% to a 90-day low, opening this morning at 0.6452. Wall Street fell off a similar cliff, with the Dow Jones down -1.8%, S&P 500 down -1.7% and Nasdaq down -2.1%. Last night the US inflation data was released, coming in higher than expected across the board, triggering the drop we saw overnight. Core CPI m/m came in at 0.4%, expected at 0.3% from a 0.3%, CPI m/m came in higher at 0.3%, expectations at 0.2%, previously at 0.3% and CPI y/y came in at 3.1%, expected at 2.9% from a 3.4%. This data release has pushed back on the idea of rate cuts in the first half of the year, showing how sticky the inflation is, particularly in the services sector. The main contributors were housing costs, medical care, recreation and air fares - with the upward price pressures confirming the Fed still can't relax - the fight against inflation isn't over yet. Light on the US data front ahead of Friday evening's Retail Sales and Empire State Manufacturing Index releases.
 

EUR

The AUDEUR takes a fall overnight, with the pair drifting lower during the day session, and having a large drop at midnight, opening this morning at 0.6025. The European equities closed in the red, with the DAX down -0.9% and the CAC down -0.8%. It was a light day of data out of the Eurozone yesterday, with ZEW Economic Sentiment coming in slightly higher at 25, expected at 20.1 from a 22.7 and German ZEW Economic Sentiment also coming in higher at 19.9, expected at 17.4 from a 15.4 previously. Tonight, we have Flash GDP q/q being released for the Eurozone, expected to remain unchanged at 0.0%.
 

GBP

The AUDGBP takes a tumble over the past 24 hours, having a steady decline amounting to over 1% drop, opening this morning at 0.5116. UK equities took a similar fall, with the FTSE closing down -0.8%. Claimant Count Change was released last night, coming in lower than expected, at 14.1k, with expectations at 15.2k from a previous 5.5k. Average Earnings Index 3m/y was also released, coming in at 5.8%, higher than the expected 5.6% from a previous 6.7% and the Unemployment Rate came in lower at 3.8%, expected at 4% from a previous 4.2%. This strong employment data boosted the GBP, resulting in the sharp decline we saw in the AUDGBP pair. Tonight, we have CPI y/y releasing, expected to increase from 4% to 4.1%.
 

NZD

The AUDNZD had a strong jump in the morning off the back of strong Inflation Expectations q/q data released yesterday, but completed a full retrace, opening this morning at 1.0647. The Inflation Expectations q/q came in at 2.50% (prev. 2.76%) while the yearly figure is expected at 3.22% (prev. 3.6%), still above the central bank's 2 to 3% target band. Today, we have FPI m/m. No forecasts but was previously -0.1%.