AUD Opens in Similar Territory
AUD
With global risk sentiment continuing to weaken, the Aussie Dollar fell against majors over the weekend before clawing back losses this morning to open relatively flat compared to Friday's open. Asian equities finished mostly lower on Friday, with the Hang Seng down -2.0%, the Kopsi -1.0%, the Nikkei -0.2% while the Shenzhen traded +0.5% higher. The ASX slid -0.8% with materials and real estate underperforming. Commodities didn’t fare too well with Gold -1.9%, Silver -2.1%, ICE Natural Gas -1.7%, Copper -1.1% and SGX Iron Ore +0.1%. Later this morning, China will announce their benchmark lending rates decision, with the 1y and 5y Loan Prime Rates expected to be held at 3.45% and 3.95% respectively, despite the Chinese economy appearing to slow down. A fragile Yuan, China’s lower interest rates versus other major economies, monetary policy divergence and narrowing interest margins at commercial banks remain the key constraints limiting Beijing’s easing efforts.
USD
Soured risk sentiment furthered recent AUDUSD losses over the weekend, with the pair touching 3-week lows of 0.6679 on Saturday before reclaiming ground to kick off the week at 0.6701. Wall St was weak from the open with the Dow ending the day -0.9%, NASDAQ -0.8% and S&P 500 closing -0.7%. We saw no major US data on Friday, plus no releases set for the next two days. The key drivers for the USD this week include Flash PMIs on Wednesday, Advance GDP q/q on Thursday and the Core PCE Price Index m/m on Friday. The Core PCE Price Index (The Fed’s preferred inflation gauge which excludes volatile food and energy prices) is expected to show a +0.1% increase for the second straight month, which would bring the 3-month annualised metric down to the lowest point this year, bringing the runway toward a Fed interest rate cut more into focus.
EUR
With global risk sentiment continuing to take a hit, AUDEUR fell gradually over the weekend, stooping to 6-week lows of 0.6136 ahead of this morning’s open at 0.6147. The DAX gave up -1.0% while the CAC lost -0.7% in Friday's session. We’ll see no economic data from the Eurozone over the next two days, with the main event for the week being Wednesday’s Flash PMIs. The data is expected to show further contraction in Europe’s services and manufacturing sectors. In Friday’s early hours, European Central Bank President Lagarde is expected to speak in Paris.
GBP
AUDGBP kicks off the week relatively flat at 0.5178, with Pound weakness off the back of Friday’s weak Retail Sales figures countered by furthered AUD weakness. The FTSE ended Friday -0.6% lower. Retail Sales in Great Britain slumped in June by more than forecasts as cautious households reined in their spending amid poor weather, election uncertainty and the cost-of-living crisis. The headline figure fell -1.2% against expectations of a -0.6% fall. We’ve got a quiet week ahead in terms of UK economic data, with no releases over the next two days. The highlight will be Wednesday’s Flash PMIs, with the manufacturing and services sectors expected to show furthered expansion.
NZD
AUDNZD gained ground over the weekend to start the week at 1.1117. On Friday, Credit Card Spending y/y posted a -3.1% reduction as Kiwis cut back on spending given the cost-of-living squeeze. This morning’s Trade Balance is the only NZ data event this week, with the figure printing at 669m, far exceeding 294m expectations. The next major Kiwi data will arrive on Wednesday August 7, being important labour figures (Unemployment Rate, Employment Change q/q).