AUD Lower on Strong Global PMIs

AUD

The AUD opens lower after major global economies reported largely-strong Purchasing Manager Index (PMI) data overnight, with global risk sentiment also remaining soft over the past 24h. The ASX slide -0.5% led by a -2.2% fall in materials. Asian equities were mixed with the Nikkei +1.3%, Hang Seng -1.7% and Shenzhen -1.2%. Commodities also didn’t fare too well, with Gold -0.6%, Silver -0.8%, SGX Iron Ore -0.3% and CMX Copper -1.6%. It’s been a largely quiet week for the Aussie Dollar, with the only notable release being the RBA’s Monetary Policy Meeting Minutes, although the impact was muted by recent softening in consumer price data and retail spending. Next week will be key for the RBA, with Retail Sales on Tuesday and CPI on Wednesday.
 

USD

AUDUSD is testing the 0.66 handle again, opening lower at 0.6604 after stronger-than-expected US Purchasing Manager Indices (PMIs) indicated further demand in the services and manufacturing sectors. The figures contributed to the US Dollar’s already-strong week, catalysed by the FOMC Meeting Minutes which showed US central bankers questioning whether rates were ‘restrictive enough’. Risk sentiment remained soft on Wall Street overnight, which saw the Dow Jones close -1.5%, S&P 500 -0.8% and Nasdaq -0.4%. Tonight, we’ll see Durable Goods Orders, FOMC Member Waler speak as well as Revised UoM Consumer Sentiment.
 

EUR

AUDEUR remains near 2-week lows at 0.6107 after a bumpy trading session yesterday saw the pair range between 0.6124 and 0.6107. The DAX and CAC each gained +0.1%. Eurozone surveys have been pointing towards improving sentiment as of late, and yesterday’s Flash PMIs were no exception as the growth outlook continues to rebound with ‘new orders’ rise at the fastest rate in over a year. The Services PMI was at a strong 53.3 and the Manufacturing PMI increased to 47.4, approaching expansionary territory. We have no major Eurozone data ahead of German Preliminary CPI next Wednesday.
 

GBP

AUDGBP reached 0.5219 highs in the late evening before falling off to open at 0.5201, being similar territory to yesterday’s open. It’s been a big week for the Pound, with Bank of England Governor Bailey speaking, UK Consumer Price Inflation (2.3% y/y, far from last month’s 3.2% print) and Flash PMIs. The Flash Manufacturing PMI was stronger than expected, landing at 51.3 (prev. 49.4) and supporting the UK output growth in May. The Services PMI remained in expansionary territory, albeit short of expectations. The fall in UK CPI is largely attributed to a 12% reduction in the energy price cap, although the Bank of England will likely be concerned over the surprise uptick in services inflation. Many economists have pushed back expectations of a rate cut to August. This afternoon will bring Retail Sale data, with the headline figure expected to fall -0.5% m/m.

NZD

AUDNZD remains at 2-month low of 1.0828. This comes after the NZD strengthened throughout the week off the back of stronger Retail Sales data and the RBNZ interest rate decision & commentary. Yesterday, NZ Retail Sales showed an increase of +0.5% in April (expectations were for a -0.3% contraction). On Wednesday, we also saw the RBNZ hold the Official Cash Rate at 5.5%, as expected. What surprised markets, however, was the central bank’s omission of talk surrounding potential interest rate cuts in the near-term. This morning, we saw the NZ Trade Balance exceed expectations, printing at +91m. The next major event will be the Annual Budget, set to be handed down next Friday.