US Economy Maintains Growth Momentum
AUD
The Aussie Dollar opens mixed against the majors after a quiet news day yesterday. Commodities also closed mixed with precious metals Gold, and Silver were both down 0.1%, while Iron Ore, and Copper closed in the green up 0.4%, and 0.6% respectively. Asian equities followed suit, finishing the day mixed with the Nikkei +2%, Shenzhen +0.7%, and Hang Seng -1.2%. Domestically, the ASX 200 closed +0.3% as info tech and consumer services lead gains. Looking at today all eyes will be focused on the monthly CPI indicator at 11:30am, forecasted to increase from 2.1% to 2.2%. Any surprise could be a swing factor in the RBA’s next decision, given the same data contributes to, and feeds into, the quarterly CPI report due on Jan 29th. RBA Governor Bullock will also be watching closely. As she herself put it recently: “Between now and February there is going to be a quarterly inflation print but there will also be another monthly one. They’re very volatile. There is going to be a couple of labour market indicators as well, some consumption indicators. So, all these sorts of things are going to be important in thinking about how the economy is going “. This will be the key event this week, alongside with Retails Sales m/m set for release tomorrow morning.
USD
The AUDUSD coupling opens lower this morning at 0.6230 after US economic data showed a generally stable jobs market and a still robust services sector suggested that the Federal Reserve will likely slow the pace of its current rate-cutting cycle, with U.S. job openings unexpectedly increasing in November, although hiring slowed during the month. Job openings, a measure of labour demand, rose 259,000 to 8.098 million by the last day of November. The ISM Service PMI printed at 54.1 with services sector activity accelerating in December, while a surge in a measure of prices paid for inputs to a near two-year high pointed to elevated inflation. Wall Street however closed in the red with the Dow Jones -0.3%, S&P 500 -0.9%, and the NASDAQ -1.6%. It will be another busy night for US data releases with ADP Non-Farm Employment Change forecasted to decrease, Unemployment Claims forecasted to increase, FOMC Member Waller Speaking and the FOMC Meeting Minutes.
EUR
AUDEUR opens slightly higher at 0.6026 after the CPI Flash Estimate rose 2.4%, up slightly from the previous month’s result. The underlying gauge that strips out energy and other volatile items stayed at 2.7%. This outcome, stoked by fuel costs, underscores the challenge still faced by European Central Bank President Christine Lagarde and her colleagues at the dawn of a new year. She heralded January with remarks expressing her hope that inflation will get to the 2% goal at some point in 2025. Current ECB forecasts suggest Q4, although markets are still expecting hefty rate cuts throughout the year given Eurozone economic growth concerns. Eurozone equities on the other hand closed in the red with the DAX and CAC both up 0.6%. No further major news out of the Eurozone this week with only a few minor releases tonight with German Factory Orders m/m, German Retail Sales m/m, French Trade Balance, PPI m/m and possibly German 10-y Bond Auction.
GBP
AUDGBP opens flat at 0.4989 after UK construction companies indicated a loss of momentum at the end of 2024. Total business activity expanded at the slowest pace since last June, while new order growth moderated for the third month running. The headline S&P Global UK Construction PMI registered 53.3 in December, down from 55.2 in November and the lowest for six months. UK equities saw the FTSE close in the red -0.1%. No further data out of the UK today. It will be a quiet rest of the week.
NZD
AUDNZD opens slightly lower this morning at 1.1054 after the GDT Price Index came through higher than previous at -1.4%. Later this morning at 11am we will also see from our Kiwi neighbours their ANZ Commodity Prices m/m with no forecasts as of yet. No further data out of New Zealand for the rest of the week.