RBA Affirms Aussie Household Resilience
AUD
Relatively poor performance among commodities sees the Aussie Dollar open lower against major currencies this morning. Gold gave up -0.7% on Friday, Silver -0.3%, CMX Copper -1.3% while SGX Iron Ore climbed a mere +0.1%. Asian equities finished the week mostly lower with the ASX 200 -0.2%, Nikkei up +0.2% while the Hang Seng led declines, down -2.2%. Friday brought the RBA’s semi-annual Financial Stability Review, notably stating most borrowers are seen coping if interest rates stay higher for longer, given households are underpinned by savings buffers and the strong jobs market. Our central bank noted current global risks to the economy include the Chinese property sector, commercial real estate, asset price correction and geopolitics. No domestic or Chinese data set for release today. Tomorrow will bring the Westpac Consumer Sentiment release. The main event this week will be Aussie CPI y/y, on Wednesday morning. The RBA will be paying keen attention to the inflation print, particularly after last week’s stronger-than-expected labour force data.
USD
After reaching 0.6634 highs on Thursday afternoon, AUDUSD has fallen to this morning’s open at 0.6512. This comes after the US Dollar logged its 2nd strongest week so far this year, with the Dollar Index (DXY) gaining nearly 1%. This comes after the Fed has reported generally stronger US data as of late, with Fed Officials erring on the side of caution against easing too prematurely. Wall St. was mixed to end a strong week with the Nasdaq up +0.2%, S&P 500 down -0.1% and the Dow -0.8% in Friday’s session. We’ve got a big week ahead in terms of US data releases, kicking off tonight with their New Homes Sales. Later in the week, we can expect to see Durable Goods Orders, CB Consumer Confidence, Final GDP, Unemployment Claims, FOMC Member speeches and the highlight on Friday evening: Core PCE Price Index (The Fed’s preferred measure of inflation).
EUR
AUDEUR has stooped further from Thursday’s 0.6068 highs, falling throughout Friday’s session to this morning’s open at 0.6026. The DAX gained +0.1% while the CAC gave up -0.3%. Friday’s German ifo Business Climate printed at 87.8, reflecting further improvement in German business morale as the economy ‘glimpses light on the horizon’ according to ifo President Fuest. Nothing on the Eurozone data calendar today. Tomorrow evening, we’ll see the German GfK Consumer Climate release.
GBP
AUDGBP opens lower at 0.5167 after UK Retail Sales printed above expectations on Friday evening. The figure itself was flat month-on-month, although markets were expecting a -0.4% decline in consumer spending. Under the hood, a boost in clothing sales (particularly online) was combatted by poor weather impacting food shopping. The decline in fuel sales was blamed on higher fuel prices. The FTSE gained +0.6% with momentum attributed to the Bank of England’s dovish commentary on Thursday evening, where the central bank held their official interest rate at 5.25%, with Governor Bailey noting interest rate cuts this year are “in play”. A quiet week ahead for the Pound. Tonight, we’ll see CBI Realised Sales, being a survey of about 125 retail and wholesale companies which ask respondents to rate the relative level of current sales volume.
NZD
Relatively flat trading on Friday saw AUDNZD remain near 4-month highs of about 1.0875, currently sitting at 1.0872. We only have one data piece from the Kiwis this week, being ANZ Business Confidence on Thursday. The NZD (a risk-sensitive currency) initially benefitted from the Fed’s dovish hold last week, but ultimately reversed course as the USD logged its 2nd strongest week for 2024, with the Dollar Index (DXY) gaining nearly 1%. This is currently keeping the NZD under pressure, much to the benefit of Aussie purchasers.