RBA Holds, Yet Rate Hike Was Considered
AUD
The Aussie Dollar pushes higher against all majors after RBA Governor Bullock indicated the central bank considered hiking interest rates ahead of yesterday’s Cash Rate hold decision. Commodities also closed higher with Oil up 1.4%, Gas up 1.1%, Gold up 0.5%, Silver up 0.3%, Iron Ore up 1.5% and Copper up 0.7%. The ASX finished the day 1% higher while Asian equities finished strong with the Shanghai Comp up 0.5% and Nikkei up 1%. Yesterday, the Reserve Bank of Australia held the Cash Rate steady at 4.35%, as widely expected. The AUD weakened a little in the aftermath ahead of the RBA Press Conference an hour later, where Governor Bullock indicated the Board had been considering a potential interest rate increase. She also stressed that there is a long way to go in bringing inflation back down to the target range. These comments strengthened the AUD. No domestic data set for release today. On Friday we have Aussie PMI’s ahead of next week’s major Consumer Price Inflation release.
USD
The AUDUSD opens higher at 0.6659 with yesterday’s RBA commentary providing AUD strength, paired with USD weakness overnight given softer-than-expected US Retail Sales data. Little change to Wall St. with the NASDAQ closing flat, Dow Jones +0.1% and the S&P 500 +0.2%. Overnight, US Retail Sales m/m showed a minor increase of 0.1% against market expectations of a 0.3% bump. Core Retail Sales followed a similar unexpected turn, landing -0.1% lower against + 0.2% expectations. The report reflected an increasingly cautious consumer and points to a silver lining: a weaker-than-expected retail sales report increases the likelihood that the Federal Reserve will start to cut interest rates in a few months. Light data today with the US Public Holiday: Juneteenth. Tomorrow brings US Unemployment Claims. Friday night will bring Flash Manufacturing PMI and Flash services PMI which are both expected to remain in expansionary territory.
EUR
The AUDEUR has reached 1-year highs of 0.6201 this morning. This comes after AUD strength off the back of yesterday's RBA meeting paired with Euro weakness given political uncertainty in France at the moment. The DAX closed 0.4% higher and CAC 0.8% higher. Quiet start to the week in terms of data for Europe and no relevant data set to be released today, however, Friday evening some important Flash Manufacturing and Services PMIs for the Eurozone. Markets will be looking to the PMIs as they are leading indicators of economic health.
GBP
The AUDGBP opens at 1-month highs of 0.5238 ahead of this afternoon's UK CPI release. The FTSE closed 0.6% higher yesterday. No data had been released yesterday however 4:00pm this afternoon brings some important data with UK CPI y/y set to lower from 2.3% to 2.0%. This release will likely be key for the Bank of England when determining their interest rate decision tomorrow. Currently, the Official Bank Rate is set to stay the same at 5.25% tomorrow, although commentary from the central bank could move currency markets.
NZD
The AUD/NZD opens higher at 1.0842. Nothing unusual coming from NZD in terms of data this week. Tomorrow at 8:45am will bring the release of their GDP q/q data which is forecasted at 0.1% with last quarters release coming in at -0.1%.