All Eyes on CPI Report Today
AUD
A subdued day for global economic data, paired with stagnate risk sentiment spurred little movement in the currency markets with the Aussie Dollar opening this morning relatively flat across the board. Asian equites closed slightly lower with the ASX -0.3%, Shanghai Comp -0.5% and Nikkei -0.1%. Commodities saw a mixed close with Crude Oil +3.1%, Natural Gas -1.3%, Gold +0.1%, Silver +0.3%, Iron Ore +0.1% and Copper +2.3%. Yesterday we expected to see Australian Retail Sales m/m move from -0.4% to +0.3%, however actual readings came under expectations at +0.1%, with the annual figure at +1.3% compared with April 2023. Looking to the day ahead we have three data releases locally in the form of the MI Leading Index m/m, Construction Work Done q/q and, most importantly, the Consumer Price Index (CPI) y/y which is expected to see a modest decline from 3.5% to 3.4%. Upward contributors are likely to include retail petrol prices, which peaked in April, while the expected contraction in the headline figure is due to base effects, given last April's outsized +0.7% month-on-month increase will be taken out of the equation. Given the amount of uncertainty surrounding the direction and timing of the RBA's next monetary policy decision, any surprise CPI result today could heavily sway the Aussie Dollar.
USD
Despite seeing 1-week highs of 0.6680 overnight the AUDUSD opens fairly flat this morning at 0.6649, having fallen off again in the early hours this morning. Wall Street saw a mixed day with the Dow Jones -0.6%, S&P 500 flat and NASDAQ +0.6%. Consumer Confidence for May rose to 102.0, up from 97.5 and printing well above expectations of 96.0. This represents the first improvement in US Consumer Confidence in over 4 months. A quieter night tonight with the only standout release being the Richmond Manufacturing Index which is expected to tick slightly higher. All eyes on tomorrow night's two main events out of the US, which will come in the form of the Prelim GDP q/q (expected to drop from 1.6% to 1.2%) and Unemployment Claims (expected to tick higher from 215k to 218k).
EUR
A quiet night for European data sparks minimal movement in the AUDEUR pair, opening this morning flat at 0.6125. European equities dipped over yesterday’s session, closing lower with the CAC -0.9% and DAX -0.5%. Yesterday, we saw German Wholesale Price Index m/m which came in better than the expected 0.1% at 0.4%, no reaction to the data. Looking to the night ahead, the main event comes in the form of the German Prelim CPI m/m which is expected to increase +0.2% (prev. +0.5%). This will be complimented by some low tier data scattered through the night.
GBP
The AUDGBP pair traded within a 20-pip range over yesterday’s session, opening this morning flat at 0.5210. British equities ticked lower over yesterday’s session, with the FTSE closing -0.8%. A quiet day yesterday with only the release of two low-tier data pieces in the form of the BRC Shop Price Index y/y and CBI Realized Sales, both having no effect on currency markets. No other data out until Friday.
NZD
The AUDNZD remains stagnant, getting comfortable hovering around two-month lows, opening this morning flat at 1.0822. Today, we await the ANZ Business Confidence, which is not expected to move markets. The main Kiwi event this week will be their Annual Budget, expected to be handed down on Friday.