RBA Holds Again at 12y Highs
AUD
The Aussie opens lower against all currencies bar the GBP after the RBA held the Cash Rate at 4.35% yesterday. Notably, RBA Governor Michelle Bullock indicated the central bank believes rates are at the right level to get inflation back to target. Further, the RBA Statement indicated 'recent information suggests that inflation continue to moderate, but is declining more slowly than expected'. Markets were largely expecting a greater emphasis on the recent hot inflation print, or at least a more cautionary tone from the central bank. In response, the Aussie Dollar weakened. Aussie equities reacted positively with the ASX up +1.4% and every sector in the green, whilst Asian equities reacted mixed with Nikkei +1.6%, Hang Seng -0.5% and Shenzhen flat. The Commodities desk had a mixed day, with Crude Oil +0.1%, Natural Gas +1.9%, Gold +0.1%, Silver -0.1% and Iron Ore -0.1%. Looking forward, it will be a quiet day on the Aussie and Chinese news front, but markets will be looking for clues into China’s trading with Chinese Trade Balance set for a tentative release tomorrow. They are expected to increase from a previous 416B surplus to 510B.
USD
AUDUSD ranged between 0.6644 and 0.6585 over the past 24h, opening today aat 0.6588 after yesterday's RBA hold and commentary weakened the Aussie Dollar. Yesterday, FOMC Member Barkin spoke, reiterating his confidence in the Fed’s current path to their 2% inflation target. Specifically, he was on the wire saying “I am optimistic that today’s restrictive level of rates can take the edge off demand in order to bring inflation back to our target. The full impact of higher rates is yet to come.” FOMC Member Williams also spoke, reiterating “Eventually we’ll have rate cuts” but for now their monetary policy is in a “very good place”. Markets didn’t react too heavily to these comments, and there was not much else out from the US yesterday. US Equities had a relatively quiet session, with NASDAQ -0.1%, S&P 500 +0.1% and Dow Jones +0.1%. Looking forward, tomorrow night we’ll have Unemployment Claims released at 10:30pm, expected to add 4K jobs from last week.
EUR
AUDEUR opens lower at 0.6130 despite minimal figures from the Eurozone yesterday, leaving price action to react mostly off the RBA decision. Yesterday we saw German consumer spending higher than expected, with German Retail Sales m/m coming in at +0.8% (exp. +0.6%). We also had a peek into France’s trading economy, with French Trade Balance missing expectations by 500M to print at -5.5B. Euro equities had a green intra-day trading session, evident by the CAC printing green +1.4% and the DAX +1.4%. Tonight, we’ll have insight into Italian consumer spending, with Italian Retail Sales m/m at 6pm and ECB Voting Member President Nagel speaking on the wire at midnight.
GBP
AUDGBP opens flat from yesterday, beating the general Aussie trend for today, mainly due to the dovish expectations surrounding the BoE’s interest rate decision tomorrow. Yesterday, we had insight into the UK's construction sector, which showed strength with Construction PMI beating expectations of 50.4 to print at 53.0. UK equities had a green day, with TFSE +1.2%. Looking forward to the BoE decision, Governor Bailey has previously stated inflation is headed in the right direction, but his fellow committee members have sent mixed messages on the speed of the first rate cuts. Markets are expecting the MPC to hold rates at 5.25%, and this will be released at 9pm tomorrow.
NZD
AUDNZD opens lower at 1.0986 after briefly breaching 11-month highs yesterday. Minimal figures out yesterday, with just GDT Price Index printing at 1.8% overnight, higher than the pevious 0.1%. Nothing more is released until Friday, where we’ll have the BusinessNZ Manufacturing Index