UK Inflation Reaches Target Range

AUD

The Aussie Dollar remained slightly higher against the majors, still experiencing strength after this week’s hawkish commentary from RBA Governor Bullock (she indicated the RBA had considered hiking rates ahead of the most recent meeting), with little data since. Asian equities were mostly mixed on Wednesday: The Hang Seng up 2.9%, the Nikkei up 0.2%, and the Shenzhen down -0.5%. The ASX closed -0.1% lower, with losses in the financial and industrial sectors. Commodities closed mostly positive, with Natural Gas +1.7%, Silver +0.9% and Coal +1.5%. Little economic data was released yesterday. Today, China announces their 1-year and 5-year interest rate decisions, with the widely held expectation for a hold at 3.45% and 3.95% respectively. On Friday, Australian Flash Manufacturing and Services PMIs will be announced.

USD

The AUDUSD traded sideways between 0.6665 and 0.6675 throughout the course of yesterday, opening today at 0.6673. No change to Wall St yesterday, as markets were closed for the Juneteenth holiday. Last night, the NAHB Housing Market Index showed decreased house building demand, citing “persistently higher mortgage rates”. This highlights the overall pessimistic consumer sentiment and reluctance to spend money in the US. Tonight, US Unemployment Claims will be announced and are expected a little lower than last week. In addition, Building Permits and Philly Fed Manufacturing Index will be announced tonight and Flash Manufacturing and Flash Services PMIs announced Friday night, all of which can produce volatility in the currency pair.
 

EUR

The AUDEUR pair opens higher at 0.6209 after reaching another 1-year high last night of 0.6218. France’s political uncertainty is the key driver of the Euro’s weakness, following President Macron’s snap election call. The DAX closed -0.4% and CAC -0.8%. No major economic data was announced this week so far; however, French, German and Eurozone Flash Manufacturing and Services PMIs will be released from 5:15pm Friday.
 

GBP

The AUDGBP continues its 1-month highs at 0.5245, with UK Consumer Price Inflation printing at 2.0% y/y yesterday, as-expected. The FTSE closed 0.2% higher. Despite UK inflation finally reaching the central bank's target, the Official bank Rate is still expected to be held at 5.25% at this evening's meeting. A full 25bps interest rate cut isn't priced in until November. Tomorrow night will see Retail Sales m/m, and Flash Manufacturing and Services PMIs released. Volatility in the currency pair can be expected if any of this data does not meet expectations.
 

NZD

The AUDNZD opens higher at 1.0867, dropping from its 1-month high of 1.0885 following stronger-than-expected NZ GDP q/q data this morning (+0.2%, exp. -0.1%). No new data will be released this week from New Zealand.