AUD Making Moves Ahead of CPI Today
AUD
The Aussie Dollar opens higher against all the majors apart from the NZD after yesterday’s rate decision where the RBA held its cash rate at a 12-year high of 4.35% for a seventh straight meeting, reiterating that it’s keeping policy restrictive as it seeks to return inflation to within target. Although officials struck a hawkish tone in the Rate Statement, markets took the Press Conference with Governor Bullock as decidedly more dovish, especially her comment that the board didn’t “explicitly” discuss raising rates at their meeting, with the AUD weakening in the aftermath. The downturn was only temporary, with the release of ramped-up monetary policy moves in China boosting the AUD as well as seeing the Shanghai Comp posting a +4.2% gain, the largest daily rally in over 4 years. Other Asian equities also ended the day upbeat, with the Hang Seng +4.1%, Shenzhen +4.3% and Nikkei +0.6%. Locally, the ASX slid -0.1%. Commodities also saw a boost closing in the green with Gold +0.4, Silver +0.1, Iron Ore +1.8%, and Copper +4.2%. Later this morning we have Australia's big inflation release for the month, being the August CPI figure. The headline is expected to drop from 3.5% year-on-year to 2.7% year-on-year. While the monthly CPI is more volatile than the official quarterly CPI measure, the data will be used to produce the Q3 trimmed mean inflation estimate, which the RBA will receive ahead of its next meeting in November.
USD
The AUDUSD soars to near-14-month highs of 0.6903, having briefly touched these levels for 2 days in December 2023, then unseen since mid-July 2023.This comes after further USD weakness paired with AUD strength on the back of a relatively hawkish RBA Rate Statement and further economic stimulus announced in China yesterday. Overnight, the Richmond Manufacturing Index came through lower than forecast at -21, and the CB Consumer Confidence plunged by the most in 3 years coming in at 98.7 as more Americans adopted increasingly negative perceptions of the current and future economy. Wall Street closed in the green with the Dow Jones +0.2%, S&P +0.3%, and the NASDAQ +0.6%. Looking at US news overnight we will have New Home Sales, and Crude Oil Inventories with both expected to decrease.
EUR
The AUDEUR opens higher this morning at 0.6171 after German ifo Business Climate and Belgian NBB Business Climate both came through below expectations with Germany’s most prominent leading indicator, the Ifo index, dropping for the fifth month in a row, illustrating that the economy is currently stuck in what appears to be a self-reinforcing vicious cycle of economic stagnation. Eurozone equities closed in the green with the DAX +0.8%, and the CAC +1.3%. No news set for release today out the Eurozone, however, tomorrow night we will hear from ECB President Lagarde when she speaks at 11:30pm.
GBP
The AUDGBP coupling opens higher this morning at 0.5142, boosted off the back of Aussie strength. Looking at UK equities we saw the FTSE close in the green at +0.3%. It will be a quiet day for the UK with MPC Member Greene speaking later this evening at 6pm. It will be a quiet week overall with no set major releases out of the UK.
NZD
The AUDNZD loses its 1.09 handle early this morning opening lower at 1.0874. It will be a quiet day and rest of the week for the NZD with no set data releases, with the next data event set for release being on September 30 with their ANZ Business Confidence report.