AUD Sideways on Minimal FX Flows
AUD
The AUD opens basically flat across the board, with minimal trading following the release of our RBA Monetary Policy Meeting Minutes yesterday, containing surprise commentary yet triggering a minor decline in the AUD before making a slight recovery in the overnight session. Markets had priced in a hawkish tone from the RBA earlier this month, but the Meeting Minutes revealed the Board had just considered whether to raise rates before ultimately deciding the case for steady policy as the stronger one. Additionally, it's revealed the RBA still finds it difficult whether to lean towards dovish or hawkish commentary moving forward. Both Aussie and Asian equities closed lower across the board, with Nikkei and Shenzhen down -0.3% and -0.4%, whilst the ASX closed -0.2% lower, dragged down by communication services and materials. Commodities had a mixed day, with Crude Oil -1.3%, Natural Gas rallying +3.7%, Gold -0.1%, Silver +0.5% and Iron Ore +1.3%. Looking forward we have insight into our manufacturing and services performance with Flash Manufacturing PMI and Flash Services PMI released at 9am tomorrow.
USD
AUDUSD inches lower at 0.6670 with a number of FOMC Members speaking on record overnight with similar rhetoric, saying inflation data would need to keep trending down for the next few months before a cut would be considered with the earliest possibility seen in late 2024. Despite this, markets are currently pricing in about 46bps-worth of cuts by the end of the year. US equities saw a green day, with Dow Jones +0.2%, S&P500 +0.3% and NASDAQ +0.2%. Looking forward we will receive the FOMC Meeting Minutes from May in the early hours tomorrow, providing insight into policy discussions that occurred earlier this month. Markets will be closely watching for any hints on the anticipated delay before a rate cut would become appropriate, as well as any discussion surrounding the possibilities of an eventual rate hike. Other noteworthy data figures will be Unemployment Claims, Flash Manufacturing and Services PMIs which will be released tomorrow night.
EUR
AUDEUR opens lower at 0.6143 despite an overnight rally due to slightly dovish commentary by ECB’s President Lagarde, saying she believes she has inflation under control, before returning some of its gains. Lagarde was on the wire saying “The forecast that we have for next year and the year after that is really getting very, very close to target, if not at target. So I’m confident that we’ve gone to a control phase.” The Eurozone also showed mixed trade figures yesterday, with Current Account coming in at 35.8B against an expected 30.2B and Trade Balance at 17.3B against an expected 19.9B, although both are still trending higher relative to previous month. Europe’s equities saw a red day, with DAX -0.2% and the CAC -0.7%. Looking forward we don’t have any data coming today, but tomorrow will be notable with insight into French and German manufacturing and services sector, with their Flash Manufacturing and Services PMI’s released in the late afternoon.
GBP
AUDGBP opens at 0.5245, following the general trend of a dip after the RBA Meeting Minutes release yesterday before climbing a little into the overnight session, after no market-moving events out of the UK yesterday. UK equities had a quiet day, with the FTSE losing just -0.1%. Forward looking we have their inflation figures out at 4pm today, with their CPI y/y priced in to decrease substantially to 2.1% from a previous 3.2%. This will be accompanied by the release of Core CPI y/y, as well as other leading indicators in inflation in their PPI Input m/m and PPI Output m/m which are both expected to increase slightly to 0.4%.
NZD
AUDNZD sits alone as the only pair opening in the green today at 1.0942 in high anticipation of the RBNZ Official Cash Rate announcement at noon. Nothing notable came out from New Zealand yesterday, while markets expect NZ policy will remain unchanged at 5.50% in a few hours. Since their previous meeting in April, New Zealand’s data has been mixed, with weaker labour market data paired with RBNZ commentary that the economy has been evolving in line with expectations, suggesting continued patience with its current monetary policy settings. Continuing to look forward we will have their Retail Sales q/q tomorrow morning, expected to increase by 1.6% from previous to print at a final figure of -0.3%.