AUD Advances on Dovish US Trifecta
AUD
Weak US data paired with strong commodity performance has allowed the Aussie Dollar to open this morning much stronger, currently sitting at 4-month highs against most major currencies, with the exception of the NZD. Commodities closed higher with Crude Oil +1.1%, Natural Gas +0.1%, Gold +0.2%, Silver +1%, Iron Ore +0.6% and Copper +0.5%. Asian equities had a mixed day with the ASX closing +0.3%, Shanghai Composite -0.8% and Nikkei +0.1%. Yesterday, we saw Australia’s Wage Price Index print at +0.8% quarter-on-quarter, landing just short of +0.9% expectations and reflecting slight easing in the domestic labour market. Lower-than-expected wage growth will not only help the RBA in the fight against inflation, but weakens the argument for potential further interest rate hikes. Today's employment data may feed into this narrative, with the Employment Change and Unemployment Rate set for release at 11:30am. The Unemployment Rate is expected to tick a little higher, moving from 3.8% to 3.9%. In addition, out of China we still await the release of the Foreign Direct Investment which remains tentative.
USD
A trifecta of weak US data has seen the AUDUSD pair advance to 4-month highs, flirting with the 0.67 handle to open this morning at 0.6699. US Consumer Price Inflation (CPI) was 0.3% m/m compared to forecasts of 0.4%, with the y/y result on-expectations at 3.4%. Paired with the ugly Retail Sales data (flat over the past month, compared to expectations of +0.4%), there has been some discussion about whether the data is enough to tip the scales in favour of an earlier rate cut from the Fed, potentially in July as opposed widely held expectations of September. The Empire State Manufacturing Index also fell to -15.6, down from -14.3, reflecting further slowdown in business activity in the New York State. Wall Street closed in the green with the Dow Jones +0.9%, S&P 500 +1.2% and NASDAQ +1.4%. Tonight, we await a myriad of data with the main events being the weekly Unemployment Claims, Building Permits, Philly Fed Manufacturing Index and Industrial Production m/m.
EUR
The AUDEUR pair pushes higher this morning, hovering around the 4-month highs seen earlier this week to open this morning at 0.6152. European equities also close in the green last night with the DAX +0.8% and CAC +0.2%. No fireworks yesterday for Eurozone data with French Final CPI m/m, Flash Employment Change q/q and Flash GDP q/q all coming in at market expectations, Industrial Production m/m ticked slightly higher from 0.5% to 0.6%. Tonight, we have some low-tier data in the form of Italian Trade Balance, EU Economic Forecasts and German Buba President Nagel Speaks. Tonight’s main event for the Eurozone comes in the form of the ECB Financial Stability Review.
GBP
The AUDGBP ticks up slightly this morning, opening around 15 basis points higher at 0.5278. British Equities saw marginal gains with the FTSE +0.2% on the close. Yesterday we only saw their 10-y Bond Auction, no reaction in currency markets. Not much out for the rest of the week with tonight only seeing MPC Member Greene Speaking and tomorrow MPC Member Mann Speaking.
NZD
The AUDNZD opens lower this morning, losing around 30 basis points to open at 1.0930. No data out yesterday and no more data out until Fridays PPI Input and Output q/q.