An RBA Rate Hike Now a 50/50 Chance

AUD

The AUD opens higher against the majors this morning after our CPI y/y came through much higher than expected at 4.0%, from the forecast 3.8% which could prompt the Reserve Bank of Australia to consider another rate hike at its upcoming meeting on August 6th. The surprising uptick in inflation, coupled with fiscal stimulus measures and the RBA's current policy bias, strengthens the case for maintaining a hawkish stance. Asian equities closed mixed with the Nikkei +1.3%, Shanghai Comp +0.8% while locally the ASX slipped -0.7% on the prospect of higher local interest rates. Commodities followed suit with Gold -0.1%, Silver -0.4% Iron Ore +0.1%, and Copper flat. No major data locally today with only MI Inflation Expectations set for release at 11am, and RBA Deputy Gov Hauser Speaking this evening at 8pm.

USD

AUDUSD opens flat this morning at 0.6647, after a volatile last 24hrs which saw a spike to 0.6688 due to  yesterday's Aussie CPI y/y release, gains which were reversed in the overnight session. Overnight we had the release of US New Home Sales come in lower than expected at 619k from the forecasted 636k due to high mortgages rates. Wall St. traded sideways overnight with the Nasdaq ultimately closing +.5%, while the S&P 500 and the Dow Jones were both flat. Big night tonight for US data releases with the main focuses being the Final GDP q/q forecasted to rise from 1.3% to 1.4%, Unemployment Claims forecasted to drop from 238k to 236k, and Pending Home Sales m/m set to rise from -7.7% to 0.6%.

EUR

AUDEUR opens higher this morning at 0.6223 partly due to the Aussie CPI Data results, however we also saw the recovery in consumer sentiment in Germany come to a standstill in June as both income and economic expectations suffered moderate losses as German GFK Consumer Climate drop further from -21 to -21.8. Eurozone equities closed in the red with the CAC -0.7%, and DAX -0.1%. No major data out of the Eurozone today with only M3 Money Supply y/y , and Private Loans y/y,  with the main events set for release tomorrow with French Prelim CPI expected to rise to 0.1% from 0.0%, also we have Spanish Flash CPI expected to fall from 3.6% to 3.4%.
 

GBP

AUDGBP opens higher this morning at 0.5267 after CBI Realized Sales showed retail sales in the UK fell faster than expected in June, reversing a return to modest growth last month. Looking at UK equities the FTSE closed in the red -0.3%. Busy day ahead for the UK with a myriad of data releases with the main focus on BOE Gov Bailey Speaking later this evening at 7:30pm.

NZD

The AUDNZD coupling opens higher at 1.0927 maintaining the gains yesterday from the Aussie CPI results. Today for our Kiwi neighbors we have ANZ Business Confidence coming out at 11am. Tomorrow will be a Bank Holiday for New Zealand as they will be celebrating Matariki.