AUD Stumbles on Sluggish GDP Data
AUD
The Aussie Dollar opens mostly down against the majors, with the exception of the USD and NZD, following weak Chinese economic data and further unrest in the Middle East. Australian and Asian equities reflected this, with the ASX -1.9%, Shanghai COMP -0.7% and Nikkei -4.2%. Additionally, commodities were down across the board with Crude Oil -2.0% and Natural Gas -3.8%. Yesterday, Australian GDP figures were released with the headline figure showing +0.2% growth quarter-on-quarter, as markets expected. After adjusting for population growth, GDP contracted on a per capita basis for the sixth consecutive quarter, setting a new record. The disappointing result will likely play on the Reserve Bank of Australia's mind as the central bank weighs up sluggish growth and sticky inflation when considering future monetary policy decisions. Also weighing on the AUD, Chinese Caixin Services PMI hinted at a large drop in China’s GDP. Today’s major event will be RBA Governor Bullock speaking on 'The Costs of High Inflation'. Otherwise, no major data will be released for the rest of the week, although volatility could be possible based on general risk sentiment arising from the Middle East.
USD
The AUDUSD opens flat this morning at 0.6717 after hitting 0.6749 highs at midnight following softer than expected labour data from the USA. Wall Street closed slightly lower, with the S&P 500 -0.4%, the NASDAQ -0.3% and Dow Jones flat. The key data release last night was the JOLTS Job Openings - which was 5% lower than expected – highlighting major issues in the US labour market as America has the fewest jobs available since January 2011. Financial markets now expect either a 0.25% or 0.50% interest rate cut from the US Federal Reserve in mid-September in order to stimulate the economy. Tonight, US unemployment data and ISM Services PMI will be released, expected to show higher unemployment and a slight contraction in the economy.
EUR
The AUDEUR opens slightly lower at 0.6062, hitting highs of 0.6090 overnight before retracting to the current rate. European equities also closed lower at DAX -0.8% and CAC -1.0%. There was low-tier European PMIs out, with no major movements in the markets. Instead, the volatility was a result of the escalations in the Middle East, as traders look to sell riskier currencies such as the AUD and buy safer currencies such as the EUR. No more major data will be released until next Thursday’s European Central Bank interest rate decision.
GBP
The AUDGBP opens lower this morning at 0.5113, following a similar pattern with the other majors due to deteriorating risk sentiment. The FTSE closed -0.3%. Yesterday, Final Services PMI released higher than expected, hinting that the Bank of England’s latest interest rate cuts were stimulating the economy. Tonight, English Construction PMI will be released, expected to contract slightly. No other major data will be released for the rest of the week.
NZD
The AUDNZD kicks off the day at 1.0847, being similar territory to yesterday morning, trading sideways throughout yesterday's session. ANZ Commodities Prices m/m released yesterday at 2.1%, recovering from the previous -1.7% fall after meat and dairy had a strong month. No major data will be released for the rest of the week.