RBA Looks to Labour Figures Today
AUD
The Aussie Dollar opens lower against most majors (flat against the USD) as global risk sentiment continues to take a hit, driving a sell-off of our domestic currency. Asian equities rounded out the session mixed, the Nikkei -0.4%, the Hang Seng and Shenzhen +0.1%. The ASX closed +0.7%, driven by real estate and info tech. Commodities were flat, with key outliers being Crude Oil +2.7% and Natural Gas -3.3%. This week so far, it's been quiet with only Chinese GDP y/y and Industrial Production y/y to note, however, today we will see the Australian Employment Change and Unemployment Rate released at 11:30am. The Unemployment Rate is expected to tick up to 4.1% which would match the April and January readings, being levels unseen since 2022. A higher Unemployment Rate usually signals a loosening labour market, allowing central banks to cut interest rates, although the RBA still has some way to go. The employment figures are an important indicator of economic health, and markets can be expected to shift heavily if expectations are not met. After that, no highly impactful data will be released for the rest of the week.
USD
The AUDUSD opens at 0.6729, reaching highs of 0.6754 overnight before retracing. Last night, US Building Permits and Industrial Production m/m landed higher than expected, leading to a drop in the current rate as the US Dollar improves. FOMC Member Waller also spoke last night, mentioning that the US Federal Reserve was ‘getting closer’ to a rate cut, which is expected to happen during September. On Wall Street, the Nasdaq closed -2.8%, the S&P 500 -1.3%, while the Dow Jones fared a little better at +0.6%. Tonight, US Unemployment Claims are released, expected to increase from 222K to 229K. Unemployment data will be a major consideration for the Fed’s next rate decision on August 1.
EUR
The AUDEUR opens at 0.6151, consistently dropping throughout yesterday before settling above the 0.6150 handle. The DAX closed -0.4% and CAC closed -0.1%. The week so far has seen a flurry of low impactful data for the Euro, however, tonight will bring the European Central Bank (ECB) interest rate decision and accompanying Monetary Policy Statement and Press Conference. The ECB is strongly expected to hold interest rates at 4.25% after recently lowering rates, however, markets will be paying close attention to the commentary for any hints at future policy decisions.
GBP
The AUDGBP opens at 0.5170, seeing a drop after UK CPI y/y was released higher than expected (2.0% vs 1.9%). Accompanying low-level inflation data was also released, with mixed market reactions. The FTSE also closed +0.3%. Today will see Claimant Count Change released from Britain, expected to decrease from 50.4K to 23.4K. In addition, The Average Earnings Index 3m/y will be released, expected to drop to 5.7% from 5.9%. Both figures heavily influence markets as unemployment and inflation heavily dictate monetary policy. Tomorrow, we will see Retail Sales m/m released, which is expected to drop from 2.9% to -0.6%.
NZD
The AUDNZD opens at 1.1068, seeing highs of 1.1106 before trading sideways around the current rate overnight. Yesterday saw a 3 year low in inflation for the NZ economy, with markets primarily expecting a rate cut later this year or early next year. No news today, but Credit Card Spending y/y will be released tomorrow.