All Eyes on Aussie CPI This Morning
Note: We will be closed Thursday April 25 in observance of the ANZAC Day public holiday.
AUD
The Aussie Dollar opens higher across the board following a reduction in risk sentiment surrounding the Middle East conflict. No further Australian or Chinese data was released yesterday, whilst Asian equities were mostly stronger as the Hang Seng climbed +1.9%, Nikkei +0.3% and Shenzhen slid -0.7%. The ASX closed +0.5% higher off the back of strong performances in IT, healthcare and financials. Commodities desk saw a mixed day with Crude Oil +1.8%, Natural Gas -4.0%, Gold -0.4%, Silver -0.2% and Iron Ore +1.3%. Today we have Aussie inflation figures out at 11:30am, where Trimmed Mean CPI q/q is expected to at +0.8%, CPI y/y expected at +3.4% and CPI q/q expected to have a lift to +0.8% (prev. +0.6%). Markets will be especially eyeing the Trimmed Mean CPI (being the RBA’s preferred measure of underlying inflation) as when combined with recent strong labour market conditions, will help determine just how far the RBA is likely to push back the potential first rate cut. Currently, many economists have pushed back rate cute expectations from August to November. No further figures until Friday, where we’ll see Aussie Import Prices q/q and PPI q/q.
USD
AUDUSD opens higher at 0.6486 after data figures showed US business activity cooling to four-month lows. Last night, US Flash Manufacturing PMI reduced by 2.0 points, missing forecasts of 52.0 to land at 49.9, whilst Flash Services PMI reduced by 0.8 points, missing forecasts to land at 50.9 – both showing weaker demand throughout the US. US equities saw a green day amidst a slight improvement in risk sentiment, with Nasdaq closing +0.6%, S&P 500 +1.2% and Dow Jones +0.7%. Tonight, we'll see US Durable Goods Orders m/m, expected to show an uptick in the value of orders placed with manufacturers. Looking forward, on Thursday night we have US Advance GDP q/q expected at 2.5% (prev. 3.4%), and Unemployment Claims expected to remain mostly unchanged at 214K.
EUR
AUDEUR inches higher to 0.6059 following a string of mixed business activity figures out of Europe in yesterday’s late afternoon session. Europe’s manufacturing sector showed weakness with the Flash PMI printing at 45.6 (exp. 46.5), while French and German also missed expectations to both show contraction at 44.9 and 42.2 respectively. The resulting Euro weakness was lightly combatted by their stronger-than-expected services sector figures, where Europe’s Flash Services PMI showed continued expansion to 52.9 (exp. 51.8). Furthermore, French and German also beat expectations to show expansion at 50.5 and 53.3. To Eurozone equities, both the Dax and CAC had rallying days, at +0.6% and +0.8% each, to also reflect the improvement in overall risk sentiment. Tonight, we have some lower-tier data coming out, with German ifo Business Climate out at 6pm and a tentative German 10-y Bond Auction release.
GBP
AUDGBP opens at 0.5208 following mixed business activity figures in the UK last night, reaching highs of 0.5230 before retracing back to our opening rate. Last night, the UK’s manufacturing sector showed weakness like the rest of Europe, albeit only slightly, printing at 48.7. This was offset by further strength in the services sector, with the Flash Services PMI showing strength at 54.9 against an expected 53.0. The Bank of England’s Haskel also spoke briefly to University Baye’s Business School, where he stated his conviction in inflation holding at 2% rather than rising later this year and reiterated the importance of their labour market being central to their interest rate decisions. UK equities saw a green day, as FTSE inched +0.3% higher. Onwards looking, just one low-tier data piece out today, being the CBI Industrial Order Expectations, expected to increase slightly from last month to show some manufacturing strength.
NZD
AUDNZD opens higher at 1.0930 with no further figures coming out of NZ yesterday, leaving the currency pairing to react based on Aussie strength from lowering global risk sentiment. A quiet week ahead, with the next piece of important data out next Wednesday, where their unemployment figures will be released.