AUD Opens The Week On The Front Foot

AUD

The Aussie Dollar opens higher across the majors this morning, climbing out of Friday afternoon's lows after NAB predicted the the RBA will leave interest rates on hold for longer than previously expected. Asian equities finished the week mostly stronger, the Nikkei +0.6, Shenzhen +0.2%, and the Hang Seng flat. The ASX closed modestly higher, +0.2%, led by IT and financials. Commodities were overall down, with Natural Gas -1.2%, Cotton -2.5% and Wheat -0.7% leading the way. Chinese Manufacturing and Non-Manufacturing PMIs were announced yesterday, with Manufacturing PMI staying on target but non-Manufacturing missing by 0.6 at 50.5, indicating that the Chinese economy is expanding at a lower rate than expected. This week will be a relatively quiet week for local data, with last week’s RBA Monetary Policy Meeting Minutes announced on Tuesday and Retail Sales m/m on Wednesday. 

USD

The AUDUSD is up at 0.6677 after falling to 0.6620 on Friday afternoon, following US data on Friday night showing that inflation in the US continues to trend lower towards the Fed’s target. Wall Street was down overall -Dow Jones -0.1%, S&P 500 -0.4% and NASDAQ -0.7% - stemming from political uncertainty from Friday’s presidential debate. A flurry of American data was released Friday night, with Core PCE Price Index m/m at 0.1% as expected, down from 0.3%. This key inflation measure used by the US Federal Bank boosts chances of a rate cut in the second half of 2024. Tonight, Final Manufacturing PMI will be released and expecting to hold at 51.7. This week is a busy week for American data, so volatility can be expected if any data shifts against the narrative that the American economy is recovering.

EUR

The AUDEUR opens higher at 0.6218, dropping to 0.6192 on Friday before hitting highs of 0.6240 on the weekend in what was a volatile session. European equities closed mixed with DAX +0.1% and CAC -0.7%. French Prelim CPI m/m and Spanish Flash CPI y/y both released on Friday as expected, avoiding any shock increases in inflation like we had in Australia last week. Today, German Prelim CPI m/m is announced, expected to rise from 0.1% to 0.2%. Eurozone Core and CPI Flash Estimate y/y will also be announced tomorrow night, with both expected to drop 0.1%. However, the key source of AUDEUR volatility is the French Parliamentary Elections, set to take place on Sunday with potential for aggressive market swings as polling results are announced.

GBP

The AUDGBP opens higher at 0.5279, dropping to 0.5242 on Friday before hitting highs of 0.5288 over the weekend. The FTSE continues to drop lower, closing at -0.2%. Some British economic data was released on Friday, but was eclipsed by the political uncertainty stemming from the Parliamentary Elections set for this Thursday. Today, additional low-tier data will be announced including Nationwide HPI m/m and Final Manufacturing PMI. This week will be a quiet week for economic data, however the Bank of England has warned of ‘economic risks’ stemming from the election this Thursday.

NZD

The AUDNZD opens higher at 1.0943, dropping to 1.0919 on Friday before hitting highs of 1.0965 over the weekend. Last week was a quiet week for the Kiwi dollar, with a bank holiday on Friday celebrating Matariki Day. No data will be released today and only some minor data will be announced on Tuesday and Wednesday. The next major data release for the Kiwi Dollar will be July 10, with the Official Cash Rate and accompanying RBNZ Rate Statement.