Chinese Gloom Restrains AUD
AUD
The AUD weakened against the majors over the weekend with another batch of uniformly disappointing economic indicators from our largest trading partner, China. Their Industrial Production grew 4.5% year-on-year, while Retail Sales posted a 2.1% increase (expectations were +2.5%). The slower-than-expected growth in these figures highlight the difficulties and challenges in China's hopeful sustained economic recovery. To commodities, we saw Iron Ore +0.1%, Crude Oil + 0.4%, Gold + 0.9% and Silver gaining the most by +2.8%. Asian equities finished the week mixed, Nikkei -0.7%, Shenzhen -0.4% and Hang Seng +0.8%. Locally, the ASX closed +0.3% as materials outperformed. We have a quiet couple of days ahead with no major Australian data as well as China’s Mid-Autumn Festival. This week’s big news will be Australia's employment data on Thursday.
USD
The AUDUSD declines over the weekend, opening at 0.6710 as UoM Consumer Confidence in the US improves, rising to 69 from than the expected 68.3. Details of the survey showed that the UoM Inflation Expectation edged lower to 2.7% from 2.8%. Wall St held gains into the close with the S&P ending the day up +0.5% while the Dow and Nasdaq were +0.7% higher at the closing bell. No major US data releases are scheduled for today, but tomorrow’s Core Retail Sales (exp 0.2%, prv 0.4%), Retail Sales m/m (exp -0.2%, prv 1.0%) and Industrial Production (exp 0.1, prv -0.6%) will be key drivers, potentially heightening volatility. Looking ahead, we will see a big day on Thursday with the Fed’s widely anticipated interest rate decision. As of this morning, markets are pricing in 37bps of cuts, suggesting market participates are largely on the fence when it comes to a 25bps vs 50bps decision.
EUR
AUDEUR slid over the weekend, opening at 0.6052 with stronger-than-expected Eurozone Industrial Production results coming in at -0.3% (exp -0,6%) supporting the EUR. Equity markets closed higher with the DAC +1.0% and CAC +0.4%. No major Eurozone data releases are expected today, but tomorrow’s Eurozone ZEW Economic Sentiment report expected at 17.2 (prv 19.2) could add pressure to the AUD. For the week ahead, we will see Eurozone’s Final Core CPI y/y and Final CPI results on Wednesday.
GBP
AUDGBP slid throughout the course of Friday's session before trading sideways over the weekend to kick off the week at 0.5108. Equities closed in the green with the FTSE +0.4%. No major UK data today. Looking forward we will see potential volatility during the week with CPI y/y on Wednesday, the Bank of England interest rate decision on Thursday and Retail Sales m/m on Friday.
NZD
AUDNZD opens a tad higher at 1.0885, having touched 1.0854 lows on Friday evening before recovering over the weekend. This morning's BusinessNZ Services Index printed at 45.5, reflecting further contraction in the Kiwi services sector as businesses continue to grapple with the relatively high interest rate environment. The key event this week will be NZ GDP figures, on Thursday morning.