AUD Advances as US Inflation Softens
AUD
They Aussie Dollar kicks off the week stronger against all majors bar the NZD. This comes after further improvements in global risk sentiment, with reduced recessionary fears in the US as inflation reported lower than expected (Core PCE +0.1% month-on-month), as well as China's recently announced stimulus package. Asian equities ended the week upbeat, the Nikkei +2.3%, Hang Seng +3.6%, and Shenzhen +4.5% buoyed again by Chinese stimulus forecasts. Locally, the ASX closed a modest +0.1%. Commodities were mainly flat to end the week with the biggest mover being Oil at 1.4%. China will enter its Golden Week holiday today, although before the festivities begin, we'll see their Manufacturing and Non-Manufacturing PMI data. The manufacturing sector is expected to have contracted again, although at a much slower pace than previously. The main AUD event this week will be Retail Sales m/m tomorrow.
USD
AUDUSD opens stronger this morning at 0.6916 after touching highs of 0.6936 over the weekend. This is attributed to a weaker Core PCE Price Index m/m which increased by only .1%, short of +0.25% forecasts. The Fed's preferred inflation gauge is on the path to 2% annual inflation. This will allow the central bank to focus more on jobs and growth. With income growth slowing alongside a noticeable downshift in the jobs market, pricing or substantial Fed policy easing looks set to persist. Wall St. was mixed to finish the week with the S&P 500 closing -0.1%, the Nasdaq -0.4% and the Dow Jones +0.3%. Tonight, FOMC Member Bowan Speaking, Chicago PMI and Fed Chair Powell to speak. Powell tonight should help clarify the Feds rate path. It is a bit of a busy week this week of data for the US. With the main event on Thursday night with their Non-Farm Employment Change and Unemployment Rate. As the seasons shift to autumn in the northern hemisphere, so may the seasonal adjustments to nonfarm payrolls become more favorable and if so, then in a way that may temper concerns about the US job market and how quickly the FOMC should be cutting rates.
EUR
AUDEUR opens stronger this morning at 0.6192 after touching highs of 0.6203 over the weekend after US inflation reported lower than expected. On Friday night Spanish Flash CPI y/y fell to 1.5% from 2.3%. This evolution is mainly due to the fall in fuel prices, and also, although to a lesser extent, to the decrease in food and electricity prices, compared with the rise in September 2023. Eurozone equities, DAX was the biggest mover at 1.2% and CAC was flat to close the week. Tonight, German Prelim CPI m/m is expected to come in at 0.1% from -0.1%. European Central Bank President Lagarde is also speaking on monetary policy at the European Parliament, in Brussels. This week’s main event is their Core CPI Flash Estimate y/y and CPI Flash Estimate y/y tomorrow evening. The Core CPI Flas Estimate is forecast to drop by 0.1% (2.7%) and CPI Flash Estimate is forecast to drop from 2.2% to 1.9%.
GBP
AUDGBP opens stronger at 0.5168 after hitting highs of 0.5173 on Saturday. There was not much data out over the weekend. To equities, the FTSE closed flat to end the week. This afternoon they have their Current Account and Final GDP. Final GDP is forecast to come in flat at 0.6%. Their main event will be Friday with their Construction PMI. That is expected to come in relatively flat.
NZD
AUDNZD opens flat this morning at 0.1898, with hitting lows of 1.0877 over the weekend given NZD strength on improved global risk sentiment. It was a quiet end to the week for the Kiwis. Today, ANZ Business Confidence will be released at 10am. Tomorrow, they have NZIER Business Confidence.