Fed Commentary to Shape Markets
AUD
The Aussie Dollar opens lower against majors (aside from the NZD) after Aussie Retail Sales figures for March showed a surprise decline in consumer spending. The figure landed at -0.4% (exp. +0.2%, prev. +0.2) which reduced recent murmurs of another increase in the Reserve Bank of Australia Cash Rate this year. These came after the recent hot Aussie consumer inflation print, thereby creating a headache for the RBA in terms of monetary policy moving forward. Commodities also saw a dive yesterday with Gold -0.3%, Silver -0.3%, Iron Ore -1.2%, and Copper -2.8%. Asian equities on the other hand were mixed with the ASX +0.3%, Shanghai Comp -0.3%, and the Nikkei +1.2%. No major news for the Aussie today with only Commodity Prices y/y set for release at 4:30pm.
USD
The AUDUSD coupling takes a dive opening at 0.6475 after our March Retail Sales data came through lower than forecasted. Adding to the mix, well-performing U.S. data released overnight saw USD strength as worker pay rose more than expected in Q1 in another sign of persistent inflation. The Employment Cost Index q/q came through stronger than forecasted at 1.2%. On the other hand, Consumer Confidence dropped to its lowest level in nearly two years, printing at 97.0. Wall Street closed in the red with the Dow Jones -1.5%, S&P 500 -1.6%, and the Nasdaq -2.0%. We have a massive night ahead in terms of US data, with Final Manufacturing PMI, ISM Manufacturing PMI, JOLTS Job Openings, and the main event being the Federal Funds Rate release, which is forecasted to hold at 5.50%. We'll also see the FOMC Statement and FOMC Press Conference. Stubborn inflation has raised concerns about where policy is headed, and with markets pricing in a near-zero chance of an interest rate cut from the Fed tonight, it's likely the Press Conference commentary that could move markets.
EUR
The AUDEUR opens lower this morning at 0.6070 after the Eurozone Core CPI Flash Estimate y/y came through higher than forecast at 2.7%. Eurozone equities closed in the red with the DAX and CAC both -1%. No news out of the Eurozone today, with markets likely quiet in celebration of May Day.
GBP
The AUDGBP coupling loses its 0.52 handle, opening lower at 0.5183 after Aussie Retail Sales came through much less than expected, and some minor positive data out of the UK yesterday. Looking at UK equities, the FTSE closed flat. No major releases today out of the UK with only Nationwide HPI m/m, Final Manufacturing PMI and 10-y Bond Auction.
NZD
The AUDNZD opens up higher this morning, reaching 11-month highs of 1.1018 ahead of the open at 1.1011. This comes after their Employment Change q/q fell -0.2%, falling well-short of expectations of a +0.3% gain. The Unemployment Rate also increased to 4.3%. Later on in the morning, we will hear from RBNZ Gov Orr as he is scheduled to speak at 11am.