Stronger China PMIs Supports AUD

AUD

Slightly stronger Chinese PMI data on Friday gave the Aussie Dollar a lift, opening higher against most majors this morning. The Chinese Non-Manufacturing PMI came in 0.5 points better than expected at 51.4, the Manufacturing PMI landed on expectations at 49.1 while the Caixin Manufacturing PMI came in 0.2 better at 50.9. Local and Asian equities finished the week green across the board with ASX up +0.6%, Hang Seng up +0.5, Shanghai Comp +0.4% and Nikkei up +1.9%. Commodities finished in the green also, with Crude Oil up +0.2%, Natural Gas +4.4%, Gold +1.9%, Silver +2.0% and Iron Ore +0.8%. Today we have some light local employment and construction coming out at 11:30am, where ANZ Job Advertisements m/m will be released alongside Building Approvals m/m which is expected to increase by 3.8%. Tomorrow, we have the Chinese Caixin Services PMI at 12:45pm, expected to expand slightly at 52.9, but the headlining event this week will be our GDP q/q on Wednesday which is expected to increase +0.3% (prev. +0.2%). Importantly, the annual National People's Congress in Beijing opens on Tuesday and what is laid out by parliament could go a long way to determining the 2024 path for assets in China. Premier Li Qiang will outline Beijing's annual growth and other economic targets, and - crucially - a plan for achieving them. CNY and AUD movement can be expected depending on what parliament delivers.
 

USD

The AUDUSD opens in the green at 0.6522 after a hawkish Monetary Policy Report from the Fed released over the weekend. The report noted stock prices close to historical highs, whilst reiterating the FOMC “does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%”. Economic strength and an uncertain path back to 2% have pushed market expectations of when quantitative easing will begin, pushing back to at least June. Further USD weakness showed from their manufacturing sector and overall consumer sentiment, with ISM Manufacturing PMI missing by 1.7 points at 47.8, and Revised UoM Consumer Sentiment showing 76.9 from an expected 79.6. On the equities desk, Wall Street closed higher to end the week with Nasdaq up +1.1%, S&P 500 +0.8% and Dow Jones +0.2%. Looking forward to this week, it will be quiet today and tomorrow, but kicks off with ISM Services PMI on Wednesday, ADP Non-Farm Employment Change and Fed Powell testifying on Thursday, finishing up with Unemployment Claims on Friday.
 

EUR

The AUDEUR opens higher at 0.6021 with little market reaction to Friday night’s CPI figures showing inflation remaining stickier than expected in Europe. Core CPI Flash Estimates y/y was expected at 2.9%, but came in at 3.1%, whilst CPI Flash Estimates y/y were expected 2.5%, coming in at 2.6%, leading investors to further speculate on when the ECB will begin their rate cuts. Currently, markets are expecting easing to begin in June. A flurry of Manufacturing PMIs were also released on Friday, coming out of Spain, Italy, France and Germany, coming in mixed but with little market reaction. Onto equities, DAX finished up +0.3% and CAC up +0.1%, both finishing off the week in the green. Looking forward, on Tuesday we have another flurry of Services PMI data to be released, but the headline event this week will be the ECB’s Main Refinancing Rate on Friday 12:15am.
 

GBP

The AUDGBP opens slightly higher at 0.5150 with little data from the UK over the weekend. Friday night, housing inflation figures were slightly higher than expected, with Nationwide HPI m/m coming in at 0.7% to the expected 0.2%. Final Manufacturing PMI also came in 0.4 higher than expectations to land on 47.5. UK Equities finished in the green with FTSE up +0.7%. Looking forward, a quiet week to be expected, with just Final Services PMI released on Tuesday, Construction PMI on Wednesday and Halifax HPI m/m on Thursday. 
 

NZD

The AUDNZD opens flat at 1.0676 with no data coming out over the weekend. This morning, the Kiwis missed on their Overseas Trade Index q/q significantly, coming in at -7.8% (exp. -0.1%), however, with little market reaction. This week, they have ANZ Commodity Prices m/m on Tuesday, GDT Price Index on Wednesday and Manufacturing Sales q/q on Thursday.