AUD Steadies Ahead of Global Interest Rate Calls

AUD

After a tough week for the AUD with political uncertainty and diminishing global risk sentiment, the AUD starts this week marginally higher than Friday's open. Asian equities finished the week mixed, with the Nikkei -0.5%, Hang Seng +0.1%, and Shenzhen +0.3%. A stronger finish for the ASX, +0.8%. Commodities were also mixed to the end the week with Crude Oil -1.9%, Gold 0.9%, silver 0.2% Iron Ore -0.6%. We have no data coming out today or tomorrow however this week’s main event will be our key inflation data coming out with the CPI q/q forecasted to stay the same at 1%. This is the last major piece of the inflation story before the RBA's next interest rate decision on Tuesday next week, so carries additional significance.

USD

AUDUSD opens higher this morning at 0.6554, having dropped to lows of 0.6542 over the weekend. USD strength dwindled after Friday's US inflation data which showed continued disinflation. The three-month average for Core PCE now stands at +0.19% MoM (+2.3% annualized), representing a dramatic reduction from March when it was nearly double this pace. The volatile conditions in equities continued to round out last week with Wall Street rebounding; the Dow Jones closed +1.6%, the S&P 500 +1.1%, and the Nasdaq +1%. It will be a slow start to the week for USD as there is no economic data out today or tomorrow. This week’s main event is the Fed's interest rate decision on Wednesday night, with markets expecting to hold at 5.50% on Thursday morning, however given the continued disinflationary evidence the meeting could mark a change in tone from the Fed towards a more dovish tilt.

EUR

AUDEUR opens slightly higher this morning at 0.6035, having briefly teased the 0.6008 level early on Saturday morning. European equities started the day stronger across the board, DAX +0.6% and CAC +1.2%. Another quiet start to the week for the EUR with no data out today. Tomorrow, we have German Prelim CPI m/m Forecasted to rise to 0.3% from 0.1%. This week’s main event will be Core CPI Flash Estimate y/y and CPI Flash Estimate y/y both coming out on Wednesday night.

GBP

AUDGBP opens slightly higher at 0.5094, up form the low of 0.5087 over the weekend. UK Equities, FTSE up 1.2%. Today in what is the only economic data due out globally, we have M4 Money Supply m/m, Mortgage Approvals, Net Lending to Individuals m/m and CBI Realised sales. However this week's main event with be the Bank of England's Official Bank Rate decision, which is expected to see a 25bps cut from 5% from 5.25%.

NZD

AUDNZD opens higher at 1.1134 with lows at 1.1116. No data out today. Wednesday will be the main event with Building Consents m/m and ANZ Business Confidence.