RBA to Stand Pat with Commentary in Focus
AUD
The AUD sees gains across the majors amidst poor global PMI results, giving room for the AUD to rally ahead of this afternoon's RBA interest rate decision and press conference. Commodities were mixed to finish the day, with Crude Oil up 0.6%, Nat Gas up 5.6%, Gold down 0.1%, Silver down 0.2%, Iron Ore up 1.4% and Copper up 0.1%. Asian equities were mixed into the close, with the ASX closing down 0.7% and SHANGHAI COMP closing up 0.4%. There was no further news released yesterday, but all eyes will be on today’s RBA Cash Rate announcement at 2.30pm. Futures markets are almost certain that the rate will be held at 4.35%, with markets looking at the RBA Rate Statement and Press Conference to see any signals of what path the central bank will be looking to take moving forward. Futures are pricing in one potential cut before the end of year, so any hawkish statements could see a much-needed upside for the AUD. On the other hand, for quite some time the RBA has remained vocal in its openness to hiking rates if need be. If this commentary is removed from the Rate Statement and Press Conference today, we can expect to see some AUD weakness.
USD
The USD pushes higher overnight, flirting with the 0.6850 barrier overnight to hit a 9-month high of 0.6853, opening this morning at 0.6832. Wall Street was soft into the open, with the Dow closing up 0.1%, S&P 500 up 0.3% and NASDAQ up 0.1%. Last night, US PMIs were released, with their Flash Manufacturing coming in contractionary (below 50) at 47, with expectations of 48.6 from 47.9, and their Flash Services came in expansionary at 55.4. These results show a continuing trend of weak manufacturing in the US, with their economy shifting towards services and away from manufacturing. Tonight will have CB Consumer Confidence, expected to remain consistent at 103, showing improving consumer sentiment in the US, and Richmond Manufacturing Index, expected to increase to -13 from -19.
EUR
The AUDEUR climbs overnight off the back of poor PMI results from the Eurozone, hitting a 2-month high of 0.6159, opening this morning at 0.6150. European equities saw small gains to finish the day, with the DAX up 0.7% and the CAC up 0.1%. German, French and the Eurozone’s PMIs were released yesterday afternoon, all managing to come under the expectations, with only the German Flash Services and the Eurozone’s Flash Services PMI manage to come in expansionary, but still well-below forecasts. Manufacturing was expected to contract but came in worse, and the French Services PMI was the big miss of the night, expected at 53, but came in at 48.3. This may be due to the post Olympics slump that the economy may be facing. Tonight, we have the German ifo Business Climate, expected to soften from 86.6 to 86.1.
GBP
The AUDGBP sees small gains over the past 24 hours, pushing about 0.50% during the morning session before retracing most of the gains, opening this morning at 0.5119. British equities finished in the green, with the FTSE closing up 0.4%. Last night, the UK had their PMIs released, and following the global trend came under, with Flash Manufacturing PMI coming lower at 51.5, forecasted at 52.3 from 52.5 and Flash Services PMI missed at 52.8, expected at 53.8 from 53.7. Both of these figures are still expansionary, but they are softer than expected. The British economy has been struggling to grow, with their GDP unable to string together 2 consecutive months of growth, so poor PMIs add to their poor economic results. Looking forward it is a quiet week ahead, with no notable news been released for the rest of the week.
NZD
The AUDNZD opens the day flat, with the pair seeing small gains in the morning, but gave them back in the afternoon, opening this morning at 1.0908. There was no news released yesterday, and nothing further to be released for the week.