AUD Weakens Ahead of Tomorrow's CPI
AUD
The Aussie Dollar weakened in the overnight session with very little economic data to help spur any AUD strength, opening lower against all the majors bar the NZD, which opens flat. Asian equities were mixed into the close with the ASX +0.1%, Shanghai Comp -0.9% and the Nikkei +0.3%. Commodities were also mixed with Crude Oil +1.3%, Natural Gas +5%, Gold -0.3%, Silver -2.1%, Iron Ore -1.2% and Copper -1.7%. No data out yesterday, or today as the quiet start to the week continues in anticipation for tomorrow’s CPI y/y release, which is expected at 3.6%, up from last month's 3.4% reading. Stalling disinflation would be positive for the Aussie Dollar, potentially combatting recent weak local and Chinese data releases. Nothing out for China until Friday’s Manufacturing PMI, which is expected to remain relatively flat.
USD
The AUDUSD pair saw a decline over yesterday’s trading session, losing about a quarter of cent to open this morning at 0.6535. Not much movement on Wall Street yesterday, closing mixed with the S&P 500 -0.2%, Nasdaq +0.1% and Dow Jones flat. A quieter session on the data front, having only seen the release of New Home Sales which sightly missed the mark by 19K coming in at 661K. However, tonight we can expect to see a bit more movement as we await the release of the Core Durable and Durable Goods Orders m/m, Richmond Manufacturing Index and the CB Consumer Confidence which have mixed expectations.
EUR
Despite a relatively dry data calendar, the AUDEUR pair also exhibited a sustained deterioration over the course of yesterday's session, losing around half a percent to open this morning at 0.6027. European equities finished yesterday’s session mixed with the CAC -0.5% and the DAX flat. No data out for the Eurozone yesterday, however, we did see ECB president Lagarde say the retreat in inflation in the euro zone will continue but that she and her colleagues need to see more evidence that price growth is returning to their goal before considering rate cuts. Tonight, we will see some low-tier data in the form of German GfK Consumer Climate, M3 Money Supply y/y and Private Loans y/y.
GBP
The AUDGBP drops close to 25 basis points in the overnight session, opening this morning at 0.5147. British Equites closed lower with the FTSE -0.3%. A quiet start to the week for the Pound, only seeing the release of some mid-tier in the form of the CBI Realized Sales which came in a lot better than expected with previous figures reading at -50 and expectations at -33 but coming in at -7. Only another low-tier release for the Pound today, in the form of the BRC Shop Price Index y/y.
NZD
The AUDNZD pair started yesterday’s session quiet strong reaching heights of 1.0633 before dropping steeply back down to open this morning flat at 1.0590. No data out yesterday or today, however, tomorrow we will see the release of their interest rate decision, which is largely expected to remain flat at 5.5%. Surprisingly, markets are pricing in a little over 1/4 change of a 25bps hike, despite NZ inflation falling faster than previously expected. The most recent annual print landed at 4.7%, while only six months ago the Kiwi central bank expected inflation to be at 5.2% at this point in time. Any surprise decisions tomorrow will likely bring volatility to the currency pair.