Strong US PMIs Keep AUD at Bay
AUD
The Aussie opens slightly lower across the board as markets digested the results from the range of services and manufacturing PMI data points that were released globally on Friday night (results see below). Asian equities were mostly lower into Friday's close with Hang Seng down -1.7%, Shenzhen -0.3% and Nikkei -0.1%, whilst ASX managed a +0.3% gain with utilities and energy climbing. Commodities didn't offer AUD any support, with Crude Oil -0.8%, Natural gas -1.5%, Gold -1.6%, Silver -3.9% and Iron Ore -0.5%. Looking at this week ahead, we have Westpac Consumer Sentiment out tomorrow morning however the main event for this week will be the Aussie CPI y/y out on Wednesday, forecasted at 3.5%. The previous two CPI y/y figures were both higher than expectations, playing a role in the RBA revealing they were considering a further interest rate hike at their meeting last week.
USD
AUDUSD opens lower at 0.6636, having peaked at 0.6670 on Friday night before strong services and manufacturing PMI figures from the US forced the pair lower into the close. Flash Services PMI came in at an expansionary 55.1 against an expected 53.4, as did Flash Manufacturing PMI which came in at 51.7 against an expected 51.0. These strong figures, combined with robust Existing Homes Sales data support the "rates higher for longer" narrative which has been losing steam in recent weeks after weak Retail Sales and CPI data. Wall Street finished the week meekly, with Dow Jones flat, S&P 500 -0.1% and NASDAQ -0.2%. Looking to the week ahead and we have FOMC members Waller and Daly speaking tonight. Thursday night things will start to heat up with a raft of US data, but the data will peak on Friday night with the release of the Core PCE Price Index which is the Fed's preferred measure of inflation and will guide market expectations for the timing of that first Fed rat cut.
EUR
AUDEUR opens marginally lower at 0.6208 despite weaker economic data from The Zone; both French and German Flash Manufacturing PMIs continued to struggle with France in contractionary territory at 45.3 and Germany similar at 43.4, both also disappointing against expectations by a wide margin. Looking at the Services Sector, the equivalent data was also weak (albeit to a lesser extent), with France printing at 48.8 against an expected 50.0 and Germany printing at 53.5 against a 54.4. Europe’s overall figures did not paint a better picture either, with Eurozone’s own Flash Manufacturing and Services PMIs both missing expectations to print lower at 45.6 and 52.6 respectively. Euro equities drifted lower in the face of the disappointing data, the CAC losing 0.6% and CAC -0.5%. Looking forward it will be light on data out of Europe today, with just German ifo Business Climate out tonight.
GBP
AUDGBP opens a few pips lower at 0.5250 after mixed data out of the UK on Friday night. UK Retail Sales for the month of May printed at 2.9% which was the second strongest result in 3 years, whilst Flash Manufacturing PMI remained right on expectations at 51.4, and Flash Services PMI missed expectations at 51.2 against an expected 53.0. Like the rest of Europe, UK equities had a red day with the FTSE -0.4%. Looking forward, we have a quiet start to the week, however on Thursday night we have BoE Governor Bailey holding a press conference about the Financial Stability report, and UK Final GDP q/q on Friday.
NZD
AUDNZD opens slightly lower at 1.0856 with no kiwi data released on Friday. This morning we had the NZ Trade Balance come in at a strong 204M against an expected 155M, however with little effect on markets. Later today we have NZ's Credit Card Spending y/y at 1pm and later in the week, ANZ Business Confidence on Thursday.