Real Wage Growth to Delay RBA Cuts?
AUD
The Aussie Dollar opens mixed this morning after yesterday's RBA Monetary Policy Meeting Minutes stated that inflation is still too high, and a further increase in interest rates cannot be ruled out, however a hold is the most likely result moving forward (depending on incoming data). We also saw some news out of China, with them supercharging their stimulus with the biggest cut in mortgage reference rate on record, as Beijing cut the 5-year Loan Prime Rate by 25bps to 3.95, while holding the 1-year Loan Prime Rate at 3.45%. Commodities also saw a mixed performance with Copper +0.6%, Iron Ore -1%, and Silver and Gold -0.2%, 0.1% respectively. Asian equities followed suit with the ASX -0.1%, Shanghai Comp +0.4%, while the Nikkei -0.3%. We have the MI Leading Index m/m set to be released at 10:30am, however, all eyes will be focused on the Australian Q4 Wage Price Index at 12:30. The figure is expected at +0.9% after a record previous reading of +1.3% (largely driven by a sizeable increase to the minimum wage). An annualised figure above 4.1% today would reflect an uptick in real wage growth (last week's CPI printed at 4.1% y/y), which could further strengthen the AUD and detract from the market's view of impending RBA interest rate cuts.
USD
The AUDUSD neared monthly highs at 0.6579 overnight after the CB Leading Index m/m printed worse than expected (-0.4%, exp. -0.3%), before readjusting and opening this morning at 0.6549. Wall Street closed in the red with the Dow Jones -0.1%, S&P 500 -0.8%, and the Nasdaq -1.1%. Tomorrow morning's FOMC Meeting Minutes will be closely monitored for clues on the Fed's views of the US economy. We'll also see Flash PMI data in Friday's early hours.
EUR
The AUDEUR opens relatively flat at 0.6060, having reached 0.6075 highs in yesterday's session before normalizing this morning. Eurozone equities closed mixed with the CAC +0.3%, and the DAX -0.1%. No major news today out of the Eurozone with the German 10-y Bond Auction being listed as a tentative release. Focus will be on tomorrow's Eurozone Flash Manufacturing/Services PMIs which are all forecasted in contractionary territory, albeit closer to the break-even point than previous figures.
GBP
The AUDGBP rallied to 3-week highs of 0.5208 overnight, spending little time over the 0.52 handle before falling back to this morning's open at 0.5186. Bank of England Monetary Policy Report Hearings hinted that the central bank is likely to hold interest rates higher for longer before slashing them more sharply than expected in the second half of the year. The FTSE also closed -0.1%. No major news set for release today with only Public Sector Net Borrowing at 6pm tonight, however, tomorrow we will get the release of the UK Flash Manufacturing/Services PMIs.
NZD
The AUDNZD opens slightly lower this morning at 1.0621 after PPI Input and Output figures outperformed forecasts. No further news today, however, tomorrow we will see the release of the NZD Trade Balance, and Credit Card Spending y/y.