China's CPI Rises for 3rd Month

AUD

Weakened commodity performance sees the AUD open a little lower against majors this morning, with SGX Iron Ore -0.5%, Silver-0.4%, Gold +0.7% and Crude Oil -1.1% in Friday’s session. Asian equities were stronger, led by the Hang Seng +2.3 and Nikkei +0.4%. The ASX closed +0.4% higher on the back of +1.9% gains in energy and +0.7% gains in financials. On Saturday, we saw China’s consumer prices rise for the third month, with CPI y/y 0.3% and PPI y/y extending declines -2.5%, signaling improvement in domestic demand. The closely watched numbers follow better-than-expected imports data from China in April, suggesting Beijing’s ongoing support measures over the past several months may be helping consumer confidence. No major Aussie data ahead of Wednesday’s Wage Price Index q/q.
 

USD

AUDUSD maintains the 0.66 handle, having traded sideways over the weekend, testing the 0.66 support level a few times ahead of this morning’s open at 0.6606. A quiet end to the week saw minor gains on Wall Street, with the Dow Jones +0.3%, S&P 500 +0.2% and the Nasdaq flat on the day. The University of Michigan (UoM) Consumer Sentiment Survey for May printed at 67.4, down from the 77.2 in April and well-off expectations of 76. The deterioration in sentiment is attributed to the surge in inflation fears, with the UoM 1-y Inflation outlook jumping to +3.5%, up +0.3% from a month ago. The USD briefly weakened on the headline sentiment miss, though recovered quickly as markets focused on the inflation data. We’ve got a big wee ahead for the USD, with PPI tomorrow evening, followed by CPI, Retails Sales and the Empire State Manufacturing Index on Wednesday. The spotlight will be on the CPI report, with underlying US inflation expected to moderate for the first time in six months, offering a ray of hope that price pressures will start to ease again after a strong of upside surprises.
 

EUR

Relatively flat trading over the past few days sees AUDEUR open at 0.6131, being only a little lower than Friday’s open. The DAX and CAC gained +0.5% and +0.4% respectively on the day. Another quiet week ahead for the Eurozone, with eyes on the European Central Bank Financial Stability Review, on Thursday evening. Tomorrow, we’ll see German Final CPI m/m and ZEW Economic Sentiment.
 

GBP

AUDGBP opens at 0.5272, a little lower than Friday’s open, with the FTSE closing +0.6% on the day. A quiet one for the UK today, with tomorrow afternoon bringing their employment figures. Last week, the Bank of England appeared more dovish than expected, with two Members voting for a rate cut. Tomorrow’s employment figures will likely feed into the decision surrounding the timing of the next interest rate move. The Claimant Count Change is expected to tick up to 13.9k (prev. 10.9k) and the page of wage growth is expected to slow further, continuing monthly declines since September 2023.
 

NZD

AUDNZD reached 1.0990 highs on Friday evening before falling off again, opening a little higher than Friday’s open at 1.0973. This morning’s BusinessNZ printed at a contractionary 47.1, basically in line with the previous reading. NZ Inflation Expectations q/q are expected at 1pm today, being the main Kiwi event for the week.