RBA's Bullock Challenges Dovish Sentiment
AUD
The Aussie opens higher than major currencies after a more hawkish stance from our RBA yesterday. Yesterday, Australia's central bank announced another Cash Rate hold at 4.35%, exactly on market expectations. In the statement release, the RBA re-iterated the path of interest rates would be whichever was required to bring inflation to their target range, including hiking if necessary. In the press conference, RBA Governor Bullock pushed back on eager rate cuts, especially by mortgage owners, stating she understands the pain of higher repayments, but rampant inflation across many areas of Australian’s lives is most painful. Asian equities were mixed with Hang Seng +4.1%, Shanghai Comp +3.2% and Nikkei -0.5%, while our ASX fell -0.6% led by sell-offs in mining stocks. On the commodities desk, it was a mixed day with Crude Oil and Natural Gas both +1.1%, Gold and Silver both -0.1% and Iron Ore +0.4%. Today, no more data coming from Australia or China, however tomorrow eyes will be on the Chinese CPI y/y and PPI y/y to be released at 12:30pm.
USD
AUDUSD opens higher at 0.6522, despite swinging as low as 0.6487 in our overnight session. This morning at 4:00 am Fed Member Mester spoke before the Ohio Bankers League, indicating the recent strong employment and spending data out of the US has given the Fed an opportunity to hold rates as they gather more evidence that they are controlling inflation towards their goals. She did not reveal any timeframe for cuts however, saying it’s completely dependent on the state of their economy. US equities closed mixed, with Dow Jones +0.1%, S&P 500 flat and Nasdaq -0.2%. Between midnight and tomorrow’s dawn, we have several Fed members due to speak, including Adriana Kugler who will be speaking for the first time since becoming a permanent voter. Thomas Barkin will also be speaking with greater weighting on his views, as he’s just got his vote back. Patrick Harker also to speak, but he’s just lost his vote, so markets will likely ignore his comments as he won’t have a say until 2026. Markets will be discerning the tempo of Fed cuts, whether once a quarter or once a meeting. Looking forward, we’ll have Unemployment Claims released at Friday 12:30am, expected to decrease by 3K to 221K.
EUR
AUDEUR opens higher at 0.6065 off the back of missed Eurozone Retail Sales and the RBA’s view. Yesterday Retail Sales m/m printed -1.1% (exp. -0.9%). Eurozone equities closed higher with the DAX +0.8% and CAC +0.6%. Tonight, we get a peek into Germany's and Italy’s economy, with German Industrial Production m/m and Italian Retail Sales m/m coming out at 6:00pm and 8:00pm respectively, as both are expected to decrease slightly from previous. Looking forward, tomorrow at 8:00pm the European Central Bank will be releasing their Economic Bulletin, offering transparency surrounding their recent interest rate hold.
GBP
AUDGBP opens a tad higher at 0.5175, with AUD strength from the RBA’s stance softened by strong UK construction and retail sales data. Yesterday, the Construction PMI beat expectations by 1.6, adding 2 points from last month to land at 48.8. The BRC Retail Sales Monitor y/y also beat expectations of 1.2% to 1.4%. Following this, UK equities closed in the green with FTSE +0.9%. Today we have insight into their housing market with Halifax HPI m/m released at 6:00pm, and a broader market view from Monetary Policy Committee Member Sarah Breeden speaking at 7:40pm.
NZD
AUDNZD opens lower at 1.0691 off the back of strong employment numbers this morning. Employment Change q/q beat expectations by +0.1%, adding 0.5% from last month to land at +0.4%. The Unemployment Rate was tighter than expected, as markets expected 4.3%, but the final figure was 4.0%. No more data out of New Zealand this week, as eyes will be on the Inflation Expectations q/q release next Tuesday.