AUD Advances After Dovish Fed Hold

AUD

The Aussie opens higher across the board after reacting positively to the relatively dovish Federal Reserve interest rate hold overnight. Locally, we had Aussie Commodity Prices y/y come in higher than last month, without any expectations or significant impact on the market. Asian equities were mostly weaker on Wednesday with the Shenzhen down -0.5% and the Nikkei -0.3%, whilst our ASX was -1.2% lower led by an underperformance in energy and materials stocks. The commodities desk saw a mixed day, with Crude Oil -3.3%, Natural Gas -2.4%, Gold +0.6%, Silver +0.7% and Iron Ore -0.1%. Looking forward, today we have insight into our construction sector with Building Approvals m/m out at 11:30am, expected to climb 5.4% from last month, as well as our Goods Trade Balance which is expected to decrease slightly by 900M from last month. Chinese banks will be closed today in observance of Labor Day.
 

USD

The AUDUSD opens in the green at 0.6526 after the US Federal Reserve decided to hold monetary policy steady. The Federal Funds Rate was kept at 5.5%, with Fed Chair Powell noting rate hikes remain 'unlikely' despite recent lack of progress in bringing inflation down further. The accompanying FOMC Statement also indicated that risks to achieving the central bank's employment and labour goals 'have moved towards better balance over the past year'. Leading up to the FOMC decision, the AUDUSD also benefited from weaker US manufacturing and employment figures, with the ISM Manufacturing PMI missing expectations by 0.8 to print at 49.2, and JOLTS Job Openings printing 190K less job opportunities than expected. US Equities reacted mixed overnight, with Dow Jones +0.2%, and both S&P500 and NASDAQ both -0.3%. Tonight, we’ll have more employment figures with Unemployment Claims out at 10:30pm, followed by Unemployment Rate, Non-Farm Employment Change and Average Hourly Earnings m/m released on Friday night. 
 

EUR

The AUDEUR opens higher at 0.6091 after riding the coattails of the US Fed announcement, with no data out of Europe yesterday given the May Day holiday. Euro equities suffered a red day, with the DAX and CAC each -1.0%. Looking forward to today we have a flurry of Final Manufacturing PMI data coming out of Germany, France, Italy, Spain and the Eurozone as a whole between 5 and 6pm. Each country will release their Final Manufacturing PMI, of which all are expected in line with previous readings, finalizing with Europe’s Final Manufacturing PMI expected to continue in contractionary territory at 45.6.
 

GBP

The AUDGBP opens in the green at 0.5205 after steadily inching up during yesterday’s intraday session, despite little meaningful figures out of the UK. Last night their manufacturing figures came out, with Final Manufacturing PMI performing better than expected at 49.1 (expected 48.7), but still in contractionary territory like their Eurozone peers. Housing inflation numbers also printed to show less inflation than expected, with Nationwide HPI m/m missing by -0.5% to land on -0.4%. UK Equities saw a red day with the FTSE -0.3%. No more UK data out today, but on Friday night we will have their Final Services PMI out, expected to remain flat.
 

NZD

The AUDNZD opens flat at 1.1007, having rallied to 11-months highs of 1.1018 yesterday morning in reaction to weaker-than-expected Kiwi employment figures. The NZ Unemployment Rate rose sharply to 4.3% from the 4.0% reported three months ago, having also been 3.4% 12 months ago. Employment also fell -0.2% q/q, missing expectations of a +0.3% increase. The weak figures show the Kiwi economy is feeling the effects of tight monetary policy. Given the lagging labour market indicators are showing signs of stress, it's only a matter of time before the Reserve Bank of New Zealand starts to prioritise the economy over the threat of reignition of consumer price pressures. RBNZ Governor Orr also held a press conference about the NZ Financial Stability Report, with little notable commentary. This morning we had Building Consents m/m come in -16.1% less than previous month to print at -0.2%, although markets did not officially have a number priced in. Looking forward we’ll have insight into NZ’s international trade with ANZ Commodity Prices m/m released on Monday morning.