AUD Kicks Off the Week Mixed
AUD
The Aussie Dollar kicks off the week mixed against majors after the attempted assassination of former President Donald Trump dominates market headlines and shakes up global risk sentiment. On Friday, China’s trading figures were released, with exports in June rising 8.6% from a year ago, coupled with weak imports due to low consumer spending, to produce a trade surplus of a record-high $99.05B USD in June. Asian equities finished the week mixed, the Nikkei -2.5%, the Hang Seng +2.6% and Shenzhen +0.1%. Locally, the ASX closed +0.9%, driven by real estate and consumer discretionary stocks. Commodities finished mixed with Crude Oil -0.4%, Natural Gas +1.3%, Gold -0.2%, Silver -2.1%, Iron Ore +1.5% and Copper +1.6%. A busy day ahead with Chinese 2Q24 GDP growth published at mid-day, expected to show continued deflation in China for five quarters in a row (the longest streak since 1999). China’s GDP q/y is expected to grow by +5.1%, although still showing signs of strong deflationary pressures when accounting for the nominal GDP growth.
USD
AUDUSD opens slightly lower at 0.6769, having rallied to highs of 0.6794 over the weekend before headlines of former President Donald Trump's assassination attempt. Markets reacted live to the news by flocking to the safe haven of the USD, as they often do so after risk-based surprises. On Friday night, Core PPI m/m and PPI m/m (Producer Price Inflation) both beat expectations to the upside, at +0.4% and +0.2% respectively, although with little effect on market expectations of the Fed cutting rates in September. US equities closed higher on the day, with Dow Jones, S&P 500 and the NASDAQ all +0.6%. Tonight, we have manufacturing figures out of the US with the Empire State Manufacturing Index set to show a slight downtick in conditions at -5.5, as well as Fed Powell due to speak before the Economic Club of Washington DC where the audience will be allowed to ask questions.
EUR
AUDEUR opens flat at 0.6218 after continuing what was a rather uneventful week going into the weekend. On Friday, French inflation figures showed continued stability in French prices for the second month in a row, with French Final CPI m/m printing at just +0.1% right on expectations, after posting a +0.0% for the month of May (also right-on expectations). Eurozone equities were stronger across the board, with DAX +1.2% and CAC +1.3%. Whilst tonight we just have Europe’s Industrial Production m/m set for release, it will be a big week out of Europe with inflation figures out on Wednesday, followed by the headline European Central Bank interest rate decision on Thursday, expected to hold at 4.25%.
GBP
AUDGBP opens flat at 0.5219, following Europe’s footsteps in another uneventful weekend with minimal UK data events over the weekend. UK equities posted a green day with FTSE +0.4%. This week will be more eventful, with a plethora of leading inflation indicators out on Wednesday. Most notably, UK CPI y/y which is expected to continue falling to +1.9% (the lowest in 3 years), and Core CPI y/y at +3.5%, also in a healthy descent from its highs of +7.0% from 1 year ago.
NZD
AUDNZD opens a little lower at 107.17 despite continued NZD weakness after the BusinessNZ Manufacturing Index showed a continued slump to 41.1 (the worst result outside of lockdowns since February 2009). Furthermore, the BusinessNZ Services Index this morning did not show much promise either, declining to 40.2 against a previous 42.6. The data shows the RBNZ interest rate hikes continue to have widespread, lagging impacts on the Kiwi economy. This week, the main event will be New Zealand’s inflation figures, with CPI q/q out on Wednesday morning, expected to decrease slightly to +0.5%.