Fed Looks to US Jobs Figures
AUD
The Aussie Dollar continues to rebound from last week’s sell-off, opening either slightly higher or flat against the majors today, with global risk sentiment improving. Asian equities started the week mostly stronger with the Nikkei +2.1%, Hang Seng +1.3%, and Shenzhen -0.5%. The ASX closed +0.9%, driven by info tech and communication services. Commodities were mostly higher with Natural Gas +4.7%, Sugar +3.2% and Cotton +1.8% and Crude Oil -1.7%. Tomorrow will be a big day for the AUD, with Aussie quarterly Consumer Price Inflation (CPI), Retail Sales, as well as Chinese business condition data (PMIs). CPI y/y is expected to decrease from 4.0% to 3.8%, while the quarterly figure is expected at 1.0%, in line with the previous release. The Consumer Price report is likely to settle the debate over whether Australia's central bank needs to deliver late-cycle policy tightening at next week's meeting, with futures markets pricing, as of this morning, 28% odds of an interest rate hike next week. China's PMI is also expected to indicate further contraction in their manufacturing sector, with the recent uptick in uncertainties surrounding the Chinese economy having contributed the AUD slide last week. The Aussie Dollar will be hoping for a hot inflation report tomorrow if it's to make up for recent lot ground.
USD
The AUDUSD opens flat at 0.6554, dropping to 0.6521 last night before increasing to the current rate. Wall St. was subdued yesterday with the Nasdaq trading +0.3%, the S&P 500 +0.2% and the Dow Jones flat for the day. There was no data released yesterday. Tonight, we will see important employment figures with JOLTS Job Openings expected at 8.02 million, which would be the lowest figure in over 3 years, reflecting the Fed's anti-inflation policy. These figures will play an important part in the Federal Bank’s rate decision on Thursday morning, with markets expecting a hold at 5.50%. Tonight, we'll also see US Consumer Confidence figures.
EUR
The AUDEUR opens higher at 0.6057, consistently trending up yesterday due to improved global risk sentiment. Eurozone equities performed well with the DAX -0.5% and CAC -1.0%. There has been no news since the G20 Meetings on Friday and Saturday, which saw muted impacts on the market. However, today will have German Prelim CPI m/m released which is expected to increase to 0.3% from 0.1% and Spanish Flash CPI y/y expected to decrease from 3.4% to 3.0%. In addition, low-level economic data will be released from France, Germany, Italy and Spain. Tomorrow night will see Eurozone CPI Estimate y/y released, which is expected to be 0.1% lower than last year. Volatility in the currency pair can be expected with the high amount of data released this week.
GBP
The AUDGBP opens relatively flat at 0.5094, trading sideways between 0.5108 and 0.5083 yesterday. The FTSE was slightly higher, closing +0.1%. There were low-level data released yesterday which resulted in little movement in the currency pair, but all eyes are on the Bank of England’s rate decision this Thursday. Markest are pricing 60% odds of an interest rate cut from 5.25% to 5.00%, thanks to inflation reducing from last year, with a 40% chance that rates are held. The lack of certainty will bring increased chances of volatility for the AUDGBP pair, given a larger amount of market participants will be surprised, no matter what the decision is.
NZD
The AUDNZD opens higher at 1.1146, trending upwards yesterday. There has been no major data released for the past two weeks, but tomorrow morning will see Building Consents m/m and ANZ Business Confidence, which typically sees a small impact on the currency pair.