Critical Aussie CPI Due This Morning

AUD

The Aussie Dollar opens slightly lower / flat against the majors this morning despite little market-moving data in yesterday’s session. Asian equities were mixed with the Hang Seng up +0.9%, Nikkei flat and ASX -0.4% lower led by IT and Communications stocks. Commodities were a mixed bag, with Gold +0.3%, Silver -1.1%, SGX Iron Ore flat and CMX Copper -0.3%. Australia’s monthly CPI reading is set for release later this morning and will be watched as a good read on services inflation (which the RBA will focus on – particularly after last week’s strong employment data). Economists expect the RBA will want to see slowing inflation in Q1 and Q2 to be convinced price pressure have eased enough for interest rate cuts to be warranted. Today’s figure is expected at 3.5%, previously 3.4%.
 

USD

AUDUSD opens at tad lower at 0.6532, having reached 0.6559 highs in the late evening before falling off despite a range of weaker-than-expected US data prints. The House Price Index (HPI) m/m and Richmond Manufacturing Index fell short of expectations, reflecting a slight slowdown in economic activity. Consumer Confidence held relatively steady at 104.7 (exp. 106.9, prev. 104.8) as consumers were sanguine about the current economic climate, although grew slightly more pessimistic about the long-term outlook. Durable Goods Orders exceeded expectations, growing 1.4% in Feb with a notable pickup in transportation equipment purchases. Little change to Wall St. into quarter-end with the S&P 500 flat, Dow Jones -0.1% and Nasdaq -0.4%. We have a quiet 24h ahead, with only Crude Oil Inventories overnight ahead of FOMC Member Waller’s talk on monetary policy at the Economic Club of New York tomorrow morning.
 

EUR

Lack of Eurozone economic data saw AUDEUR range between 0.6041 and 0.6027 in the overnight session before this morning’s open at 0.6030. The DAX and CAC gained 0.7% and 0.4% respectively in yesterday’s session. German GfK Consumer Climate data printed at -27.4 (exp. -27.9), reflecting further improvement albeit at a slow pace. Tonight, we’ll see Spanish Flash CPI y/y, expected at 3.1% (prev. 2.8%).
 

GBP

AUDGBP traded largely sideways over the past 24h, having fallen slightly this morning to open at 0.5162 - being only a few pips lower than yesterday morning. The FTSE gained 0.2% in yesterday’s session. Tonight, we’ll see the Financial Policy Committee (FPC) Meeting Minutes which will shed light on the Bank of England’s recent interest rate hold at 5.25%, with the central bank indicating they aren’t too far from interest rate cuts. Currently, the GBP swap curve signals a 25% implied probability of a rate cut by the Bank of England at the May meeting. That’s a higher expected chance than for the Fed (also May) and the European Central Bank (April).
 

NZD

AUDNZD gave up little ground over the past 24h, having traded from 1.0902 around midday yesterday to this morning’s 1.0869 lows before opening at 1.0881. Nothing from the Kiwis today. Tomorrow, we’ll see their ANZ Business Confidence print.