Energy Rebates Reduce Aus Inflation
AUD
The Aussie Dollar opens either higher or flat against most major currencies this morning, having strengthened over the course of yesterday off the back of a slightly stronger than expected CPI y/y reading. Asian equities were soft into the close, with the ASX closing flat and the Shanghai Comp closing down 0.4%. Commodities also saw mixed performance, with Crude Oil closing down 1.1%, Nat Gas down 0.5%, Gold up 0.2%, Silver up 0.1%, Iron Ore up 0.1% and Copper down 2.1%. Yesterday morning Australian CPI y/y was released at 3.5%, lower than the previous 3.8% reading, although a little above expectations of 3.4%. The overshoot can be linked to state and federal electricity rebates which were introduced at different times across the country, making it difficult to assess the impact on the headline reading. The figure provides no clear indication of the RBA's next move. The central bank may not abandon its hawkish rhetoric until the Q3 CPI report in late October, ahead of the November 5 policy meeting. Today will be quiet on the news front, with Private Capital Expenditure q/q to be released, expected to decrease from 1% to 0.9%.
USD
The AUDUSD opens in similar territory compared to yesterday morning, with the pair managing to wick through the 0.68 barrier in yesterday's session, briefly reaching an 8-month high before retracing to this morning’s open of 0.6784. Wall Street took a hit, finishing the day in the red, with the Dow down 0.4%, S&P 500 down 0.6% and NASDAQ down 1.1%. Yesterday was light on US data. FOMC Member Waller spoke and Crude Oil Inventories was released. Neither event impacted currency markets. Tonight will hold a series of data prints, all of which are expected in line with previous readings. These include Prelim GDP q/q at 2.8%, Prelim GDP Price Index q/q at 2.3% and Unemployment Claims at 232k. Unemployment is the Fed's biggest enemy now, Powell says - not inflation, noting that he will do whatever it takes to stop the unemployment rate from rising, making tonight’s unemployment data a crucial insight into how his recent Dovish tones have impacted the labour market.
EUR
The AUDEUR sees gains over the past 24 hours, breaking through the 0.61 barrier overnight to reach a monthly high, softening this morning to open at 0.6096. European equities saw small gains, with the DAX closing up 0.5% and the CAC up 0.2%. It was a quiet night on the data front for Europe, with the Private Loans y/y coming in as expected at 0.5%. Tonight, German Prelim CPI m/m is set to be released, expecting to drop to 0.0% from 0.3% and Spanish Flash CPI y/y expecting to drop to 2.4% from 2.8%. The ECB has taken a dovish stance moving forward with their policy, this forecasted drop in German and Spanish inflation should back their decisions and support their dovish forecasts.
GBP
The AUDGBP saw some gains since yesterday, rising to the top end of the weekly range, opening this morning at 0.5141. British equities were stagnant yesterday with the FTSE flat. MPC Member Mann spoke last night at a research association, not impacting markets. Tonight, there will be no news released, with the next important piece coming out next Wednesday, being the Bank of England Monetary Policy Report Hearings.
NZD
The AUDNZD continues to decline, with the pair hitting a 3-week low overnight, opening this morning at 1.0852. There was no news released yesterday. At 11am today we'll see ANZ Business Confidence, previously at 27.1.