Fed's Powell Still Reluctant to Cut Rates
AUD
A lack of meaningful data spurred minimal movement in the currency markets over night, with the Aussie Dollar opening mixed this morning. Asian Equities closed higher with the ASX +0.9%, Shanghai Composite +1.3% and Nikkei +2%. Commodities closed the session mixed with Crude Oil -0.7%, Natural Gas -2.9%, Gold +0.2%, Silver +0.1%, Iron Ore -0.9% and Copper -0.7%. A quiet day for local data yesterday only having seen Westpac Consumer Sentiment which dropped from +1.7% to -1.1% and NAB Business Confidence which ticked higher from a -2 to +4, both having minimal effect on markets. IN what is the most important piece of local data for the week, out of China today we await the release of both their monthly CPI and PPI y/y both expected to be revised higher with the CPI forecasted to move from +0.3% to 0.4% and PPI to move from -1.4% to -0.8%. Increases in Chinese inflation should have an AUD positive effect over time.
USD
The AUDUSD pair remains relatively flat this morning, gaining around 4 basis points yesterday, opening at 0.6741. US Equities also remained fairly flat with the Dow Jones -0.1%, Nasdaq +0.1% and S&P 500 +0.1%. Not much in the way of data yesterday for the Americans, with only Consumer Credit m/m and NFIB Small Business Index which where both slightly better than expectations. However overnight Fed Chair Powell testified to the US Senate where he said that more good data was needed to strengthen the view that inflation was returning to target. He added that recent data did not yet support rate cuts with inflation remaining above the 2% goal. He also stressed that decisions were being made on a meeting-by-meeting basis with the threat of cutting rates too early risking a reversal of progress on inflation and could weaken the economy and the labour market. Yellen added little to this, echoing Powell’s remarks in what was overall disappointing pair of speeches for the doves. Tonight we see Fed Chair Powell Testify again along with FOMC Members Bowman, Goolsbee and Cook, accompanied by some low tier data in the form of the Final Wholesale Inventories m/m, Crude Oil Inventories and the 10-y Bond Auction.
EUR
A lack of data allows the AUDEUR pair to tick slightly higher over yesterday’s session, opening this morning at 0.6234. European Equities dopped off overnight, with the DAX -1.3% and the CAC -1.6%. No data out yesterday, and today we will observe some low-tier data in the form of Industrial Production m/m and German Buba President Nagel Speaks. Both unlikely to affect markets.
GBP
The AUDGBP rose slightly over yesterday's session, opening this morning at 0.5272. British Equities closed in the red yesterday, with the FTSE -0.7%. Yesterday we saw some low-tier data in the form of the BRC Retail Sales Monitor y/y which missed expectations of +0.9% coming in at -0.5%. Today we will only see MPC Member Pill Speaks, which is unlikely to sway markets. Britain’s main event for the week will be released tommorow with their GDP m/m which is expected to gain 0.2%.
NZD
The AUDNZD remains flat in the anticipation of the RBNZ’s Official Cash Rate Announcement today, opening this morning at $1.1001. This morning, we saw Visitor Arrivals m/m gaining 12.8%, moving from -8.8% to +4%. New Zealand’s main event for the month will be released this afternoon with their interest rates widely expected to remain unchanged at 5.5% for the eighth consecutive meeting despite New Zealand's economy showing signs of weakness, including recession-like growth and increasing unemployment, inflation still remains above the Reserve Bank of New Zealand's target.