Presidential Debate and French Election to Drive Geopolitical Risk
AUD
The Aussie Dollar opens this morning down across the board against the majors, not being able to hold on the to the gains triggered by the shock spike in CPI from Wednesday. Commodities closed mixed with Gold +1.3%, Silver +0.7%, Copper -0.7% and Iron Ore -0.6%. Asian equities finished the day in the red with NIKKEI -0.8% and Shanghai Comp -0.9% while the ASX closed off yesterday’s session -0.3%, still clearly feeling the effects of a looming rate hike. Local data is a bit light at the moment, next week isn’t too heavy either, the highlight being monetary policy meeting minutes which may reveal some commentary on the RBA’s view of the current economic condition and just how closely they considered a rate hike at their meeting earlier this month. As a bit of a side note, don't forget the first US Presidential Debate also happens later this morning and as the race heats up, shifts in the geo-political landscape have the propensity to increase market volatility.
USD
The AUDUSD is down slightly this morning opening at a familiar 0.6650 with some solid data released in the US overnight. Wall St finished marginally higher overnight with the Nasdaq + 0.30%, while the S&P 500 as well as Dow Jones closed their sessions 0.1% higher. Good data outcomes for US last night with Final GDP q/q coming in as they expected at 1.4% from 1.3% showing slight improvements, as well as the Unemployment Claims coming in less than expected dropping to 233k from the forecast 239k. Pending home sales m/m increased from -7.7% to -2.1% although not as high as they predicted and still in decline. Tonight's Core PCE Price Index m/m, an inflation measure which strips out volatile food and energy prices and draws close attention from Fed policymakers, is set to indicate its lowest annual reading since March 2021 forecasted to drop from 0.2% to 0.1%. Inflation numbers have been the major currency market movers of recent, so hold on to your hats if the number released is much either side of expectations.
EUR
The AUDEUR opens lower this morning at 0.6207, forfeiting yesterday's gains in the overnight session. European equities closed mixed, with the DAX +0.3% and the CAC -1.0%. It’s been a quiet week for the Eurozone however some inflation data is due tonight in the form of French Prelim CPI m/m (expected to increase from 0% to 0.1%) and Spanish Flash CPI m/m (expected to drop slightly from 3.6% to 3.4%) which offer early indicators for the direction of inflation in Europe as a whole. Big day this Sunday for France, with their Parliamentary Elections. If the resurgent far-right parties are granted a stronger foothold it would likely provide opportunity for AUD to make gains.
GBP
The AUDGBP opens slightly lower this morning 0.5255. British equities yet again finished the day in the red, with the FTSE closing -0.6%. Last night, Governor Bailey spoke and revealed that risks to the UK financial system are broadly unchanged since Q1. But some asset prices have continued to rise and financial markets are continuing to expect the economy to recover and inflation to fall. Only low tier economic data to end the week, but next week heats up in the UK with Prime Minister Rishi Sunak's snap general election set to take place on Thursday.
NZD
The AUDNZD steadily pushes higher since yesterday, opening this morning at 1.09285 in what has been a quiet week NZD data. Today is a Bank holiday in NZ in observance of Matariki Day. Next week follows suit for New Zealand with not much data being revealed. The next big data release for NZD will be their official cash rate and RBNZ Rate Statement coming on Wednesday 10th of July.