US Inflation Relief Opens Door to AUD Gains
AUD
The Aussie Dollar opens the week higher across the board (with the exception of the NZD) after a strong rally last Friday midnight due to weaker US data before giving some back over the weekend. On Friday morning we had Chinese purchasing figures miss expectations slightly, with Chinese Manufacturing PMI print at 49.5 against an expected 50.5, and Non-Manufacturing PMI at 51.1 against an expected 51.5. Both are a little weaker than the previous figures, although the non-manufacturing sector remained in expansionary territory. On the equities desk, the ASX pushed +1.0% higher led by consumer staples and energy, whilst Asian equities finished mixed with Nikkei gaining +1.1% whilst Hang Seng and Shenzhen trade -0.8% and -0.4% lower. The commodities desk had a red day across the board with Crude Oil -0.9%, Natural Gas -3.5%, Gold -0.6%, Silver -2.5% and Iron Ore -1.5%. The Caixin Manufacturing PMI will be today's main event, accompanied by a few pieces of low-tier Aussie data. The main AUD event this week will be our GDP figure on Wednesday.
USD
AUDUSD opens higher at 0.6654 after rallying to highs of 0.6673 on Friday night due to weaker US inflation and manufacturing figures before retracing over the quieter Saturday and Sunday. On Friday we had the Core PCE Price Index m/m figures miss expectations, being the Fed’s preferred method of measuring inflation, coming in at +0.2% against an expected +0.3% to show a decrease in overall inflation. The figure is modestly supportive of a September rate cut from the Federal Reserve, although many would like to see more +0.2% prints, weaker consumer spending and a higher unemployment rate before then. Wall Street had a strong finish with the Dow Jones +1.5%, S&P 500 +0.8% and NASDAQ remaining flat. Looking forward, we’ll have US Final Manufacturing PMI out tonight, providing insight into sector momentum over the month. It’s expected to increase by 1.6 points from previous to print at 51.0 after the preliminary S&P readings showed improvement from April. For the US Dollar this week, we'll see PMIs as well as heavy hitting employment data on Wednesday and Friday.
EUR
AUDEUR opens higher at 0.6132 despite some stronger inflation expectations out of Europe last Friday. On Friday, Eurozone’s Core CPI Flash Estimate y/y came out +0.2% higher than previous at 2.9%. Similarly, CPI Flash Estimates y/y came in 0.2% higher than previous, at 2.6%. These figures come with the widely expected interest rate cuts from the ECB this month, with markets still pricing in a strong expectation that the ECB will continue ahead with the widely anticipated cut this Thursday. European equities finished slightly up on Friday, with CAC +0.2% and DAX flat. Onward looking, we have a flurry of Manufacturing PMI’s out from a number of European countries this afternoon. Thursday will bring the ECB's interest rate decision, Monetary Policy Statement and Press Conference.
GBP
AUDGBP inches higher to 0.5222 despite little meaningful figures out of the UK on Friday and over the weekend. On Friday, some housing inflation figures were out, with Nationwide HPI m/m printed +0.8% higher from previous month to print at +0.4% to show an increase in housing prices. Mortgage Approvals remained flat from previous at 61K to show no new mortgages approved for home purchases from the previous month. UK equities had a green day, with the FTSE up +0.5% on Friday. Onward looking we’ll have the Final Manufacturing PMI out tonight at 6:30pm, expected to remain unchanged from last month at 51.3, and tomorrow morning we’ll have their BRC Retail Sales Monitor y/y expected to add +5.6% from last month.
NZD
AUDNZD open lower at 1.0825 with no figures or commentary out over the weekend, having fallen from 1.0848 off the back of weaker-than-expected US inflation data on Friday. This week we have a leading indicator of their exporting economic health with GDP Price Index on Wednesday, followed by ANZ Commodity Prices m/m on Thursday and Manufacturing Sales q/q on Friday.