AUD Holds Steady Ahead of Global PMIs Tonight
AUD
The AUD kicks off the week flat against most majors with no heavy-hitting data released over the weekend. Asian equities finished the week strong, led by the Nikkei’s +1.5% and Hang Seng’s +1.4%, while the Shenzhen trailed +0.2%. Locally, the ASX also closed +0.2% as consumer discretionary and IT led gains. Australian Purchasing Manager Indices (PMIs) were released this morning, showing business activity in our private sector declined in September amid a sustained manufacturing downturn. That said, overall new business continued to expand while sentiment remained positive, supporting a further rise in staffing levels. The Flash Manufacturing Sector was 46.7 (contraction) while the Flash Services PMI was 50.6 (slight expansion). The main event this week will be tomorrow’s RBA Cash Rate decision, Rate Statement and Press Conference. Although inflation has started to come down again, taking pressure off the RBA to hike rates again, a cut seems some way off. Australian CPI is set for release on Wednesday, so policymakers won’t have access to the latest data ahead of tomorrow’s meeting. It’s possible they will sound less concerned about inflation although markets are on the front foot, currently pricing in near-70% odds of a 25bps cut by December.
USD
AUDUSD kicks off the week flat relative to Friday’s open, having touched 0.6828 highs on Saturday before falling off to 0.6783, then recovering, starting the day at 0.6810. Wall Street was mixed to close out a busy week with the S&P 500 -0.2%, the Nasdaq -0.4% and the Dow Jones +0.1%. FOMC Members Waller and Harker spoke on Friday evening, with Waller noting that inflation softening faster than he’d expected placed him in the half-point-cut camp at the Fed meeting last week. Another data-heavy week ahead for the USD, bringing Consumer Confidence, GDP figures, Core PCE Price Index and a talk from Fed Chair Powell. Tonight, we’ll see Flash PMIs for the manufacturing and services sectors.
EUR
After reaching 0.6113 highs in the early afternoon on Friday, AUDEUR made steady, minor declines over the weekend to start the week at 0.6101, being flat relative to Friday’s open. European equities weighed early as all indices fell near 1.0% on the open. The DAX and CAC each closed -1.5%. European Central Bank President Lagarde spoke on Friday, where she reiterated the central bank must think about how it deals with risks and uncertainty in an era of more-volatile inflation and less clarity surrounding monetary policy transmission. Tonight, we’ll see Flash Manufacturing PMIs for France, Germany and the Eurozone as a whole.
GBP
AUDGBP slides further from Thursday evening’s 0.5152 highs, tracing downward over the weekend to open at 0.5109 after the Bank of England’s Mann signaled remaining restrictive for longer and potentially cutting rates aggressively later with inflation contained in the UK. The FTSE took note, closing -1.2% lower. The Pound was also helped along by stronger than expected Retail Sales data on Friday, with the headline figure at +1.0% month-on-month (exp. +0.3%). The key UK data event this week will be Flash PMIs, tonight. All UK PMIs climbed for a second straight month in August, underscoring the brighter economic picture during 2024. Tonight, the data is also expected to reflect further expansion in the manufacturing and services sectors.
NZD
AUDNZD opens a tad lower at 1.0911, having touched 1.0934 highs on Friday evening before falling off. The only Kiwi data this week was released earlier this morning, with the NZ Trade Balance in a deficit of $2.2 billion. Exports fell -0.1% over the past month, while imports fell -1.0%.