Aus CPI to Set RBA's Tone
AUD
The AUD hits hump day mixed against the majors amidst a quiet local data calendar ahead of Australia’s important Consumer Price Inflation print later this morning. The ASX fell a minor -0.2% in yesterday’s session, weighed by info tech and financials. Asian equities were mixed with the Nikkei +0.5%, Hang Seng +0.4% and Shenzhen -0.6%. Commodities performed well with Iron Ore +0.4%, Copper +0.5%, Gold +0.4%, Silver +0.2% and Natural Gas leading the pack, up +4.3%. The major AUD event for this week, Aussie CPI, will be released later this morning. The headline figure is expected at 3.4%, down from last month’s 3.8% reading, which the RBA would like to see if the Cash Rate is to be lowered any time soon. Notably, at the last RBA meeting in which rates were left unchanged, Governor Bullock pushed back against the market’s narrative, saying it’s too early to talk about rate cuts. Markets believe rates have reached their peak and it’s only a matter of time before they start going down. As for when, there is still a substantial amount of disagreement. Currently, a rate cut is only fully priced in for the RBA’s December meeting, with traders pricing in a 70% chance of another hold in September. If today’s inflation report surprises, expectations for near-term monetary policy shifts will likely change, bringing volatility for the AUD.
USD
AUDUSD has tested the 0.68 barrier again, kicking off Wednesday at 0.6789 with the DXY (USD strength index) at 13-month lows of 100.55 as expectations of imminent monetary policy easing from the Fed continue to weaken the Greenback. A quiet session for financial markets saw Wall St. close almost unchanged yesterday, with the Dow flat, S& 500 +0.2% and Nasdaq +0.2%. CB Consumer Confidence exceeded expectations overnight, printing at 103.3, indicating overall confidence rose slightly in August, although remained within the narrow range that has prevailed over the past two years. A quiet night ahead for the US with only Crude Oil Inventories set for release. Tomorrow evening will bring Preliminary GDP q/q, expected at +2.8% in line with the previous reading.
EUR
AUDEUR traded a tight range over the past 24h, opening a little flat at 0.6071 after a quiet session in terms of Aussie and Eurozone data. The DAX gained +0.3%, the CAC fell -0.3%. We’re in another quiet week for the Euro, with only Private Loans y/y tonight and German Prelim CPI m/m tomorrow. The highlight will be CPI Flash Estimate y/y for the Eurozone on Friday. A decline in the y/y rate to 2.2% is expected.
GBP
AUDGBP fell slightly over the past 24h, touching 0.5110 lows early this morning before rebounding a tad to open at 0.5117. The FTSE closed +0.2%. Data last night showed British retailers reported a third straight month of falling sales in August with expectations of another decline in September, prompting them to lower their hiring and investment plans. MPC Member Mann will be speaking tonight. No other major GBP events this week.
NZD
AUDNZD slid to 1.0852 lows overnight before clawing back some losses to open at 1.0870. No Kiwi data today. The ANZ Business Confidence report will be released tomorrow morning.