China Surprise with Rate Cuts
AUD
The Aussie Dollar falls against the majors to start the week, driven by deteriorating global risk sentiment given political uncertainty in the US. Commodities have dropped, with Crude Oil down 0.4%, Nat Gas down 1.6%, Iron Ore down 0.8% and Copper down 0.9%, while precious metals saw soft gains with Gold up 0.2% and Silver up 0.1%. Asian equities finished the day in the red, with the ASX closing down 0.5% and Shanghai Comp down 0.6%. Yesterday, China increased support for the economy with surprise interest rate cuts, electing to prop up growth after lack of short-term stimulus disappointed investors. The 1y and 5y Loan Prime Rates were each reduced by 0.1% to sit at 3.35% and 3.85% respectively. This cut comes after sluggish growth out of China (currently the slowest pace in over a year), with President Xi Jinping planning to put technology at the center of China's economic future and tolerate slower growth in the near term. We have a quiet week ahead in terms of local data, including no news being released today.
USD
The AUDUSD continues to lower, losing over half a cent yesterday, opening this morning at 0.6642. Wall Street finished the day up, with the Dow up 0.3%, S&P 500 up 1.1% and NASDAQ leading the charge, finishing up 1.6%. It was a quiet start to the week with no news out, with tonight bringing Existing Home Sales and thw Richmond Manufacturing Index (exp. -7, prev. -10). Importantly, these are the only data being released for the majors today. Potential volatility may also be seen from the tumultuous political situation unfolding in the US, with markets digesting the news of US President Joe Biden pulling out of November’s election race and endorsing VP Kamala Harris.
EUR
The AUDEUR takes a tumble yesterday, with the pair steadily dropping lower, testing the 0.61 barrier late last night, opening this morning at 0.6099. European equities bounced back yesterday, with the DAX up 1.3% and the CAC up 1.2%. It is a quiet start to the week for the Europeans, with no news yesterday. Tonight, we'll see Eurozone Consumer Confidence data. Tomorrow's Services and Manufacturing PMIs will be the main Euro event for the week. Only the German and the Union’s Services PMIs are set to be in expansionary territory, showing a real weakness in manufacturing seen across Europe.
GBP
The AUDGBP follows the trend, dropping steadily yesterday, losing ¾ of a percent, opening this morning at 0.5135. The FTSE was soft into the close, finishing up 0.5%. In an all too familiar story, there was no news out yesterday, nor will there be any today. Tomorrow’s PMIs are the key event of the week for the Brits, giving insight into the UK manufacturing & services sectors as the economy slowly recovers from high post-Covid inflation (annual UK inflation peaked at 11.1% in October 2022).
NZD
The AUDNZD opens the day flat, with the pair keeping within a tight range to start the week, opening at a rate of 1.1114. Yesterday's NZ Trade Balance exceeded expectations. There will be no data out for the remainder of the week.