Soft Retail Sales Give Fed Mixed Signals
AUD
The Aussie Dollar opens higher across the board this morning, continuing to claw back recent losses in the aftermath of Wednesday's hot US inflation print. RBA Governor Bullock stated yesterday that we are “In a good position to get inflation down, in a reasonable time.” This was followed by printing of the Employment Change and Unemployment Rate data, both failing to meet expectations. Full time employment decreased by 4,600 to 9,825,300 people, whilst part time employment increased by 12,000 to 4,396,600. This sees the January employment to population ratio decrease to 64.1%. Our Unemployment Rate jumped quite sharply to 4.1% (2-year highs) as the labour market continues to cool in the aftermath of the RBA's aggressive interest rate tightening campaign. Asian equities were higher across the board with the Hang Seng up 0.6% and Nikkei adding 1.2%. The ASX closed 0.8% higher. No data set to print until Tuesday with the RBA Monetary Policy Meeting Minutes - set to provide in-depth details on the reasoning behind the central bank's most recent Cash Rate decision (another hold at 4.35%).
USD
AUDUSD opens higher at 0.6525, reaching levels previously held before the US CPI data caused the pair to drop 1.4% in 6 hours on Wednesday morning. US saw Crude Oil Inventories miss expectations by 8.7M. Core Retail Sales m/m fell -0.6%, Retail Sales m/m also failed to meet expectation, printing at -0.8%, compared to the forecasted -0.2%. This indicates a weak start to consumer spending, after a solid performance in the fourth quarter of 2023. Empire State Manufacturing beat expectations printing at -2.4, compared to the forecasted -13.7, showing a weak start for US manufacturing as well. US Unemployment Claims did beat expectation printing at 212K, from the expected 219k and a previous level of 220k. US Equities all closed in the green, with the Dow Jones +0.9%, S&P 500 +0.6% and NASDAQ +0.3%. Late this evening, we will see US Core PPI m/m and PPI m/m, both significant pieces of data, followed by Prelim UoM Consumer Sentiment. This week's strong CPI print doesn't provide the Fed with the confidence it needs to start cutting interest rates, so market will be keenly eyeing off tonight's producer price figures.
EUR
AUDEUR is up this morning opening at 0.6058 after improved global risk sentiment saw all major equity indices gain ground. The DAX printed in the green at +0.6%, the CAC climbed +0.9%. ECB President Lagarde has stated that although real GDP growth had stagnated in the final quarter of 2023, some forward looking survey indicators do suggest an improvement in the year ahead. With wage growth continuing to be strong, it is expected to be an important driver in for inflation dynamics in the coming quarters. Tonight, we'll see French Final CPI y/y, expected at -0.2% m/m.
GBP
AUDGBP has opened this morning up at 0.5169, recovering from Wednesday's lows of 0.5114. Last night, Bank of England Governor Bailey stated that in spite of the fact of welcoming inflation data printing lower than forecasted by -0.1%, it does not change their outlook presented at the last policy meeting, as other key inflation data has come in mixed. English GDP data printed in the positive at -0.1%, instead of the forecasted -0.2% and a previous 0.2%. The FTSE also finished the day in the green at +0.45%. This afternoon we will see the Retail Sales m/m print, with a forecast of 1.5% from a previous -3.2%.
NZD
AUDNZD has opened this morning at 1.0683, whilst the Aussie did suffer losses due to the US inflation data coming in strong, strength has been found again allowing a reclaim ground seen earlier in the week. RBNZ Governor Adrian Orr has signaled that they are still far from any interest rate cuts with a target rate of 2% p.a inflation still very far from the current 4.7% p.a.