AUD Holds Ground on RBA's Hawkish Cut
AUD
The AUD has held ground, opening mainly flat against the majors off the back of an expected RBA interest rate cut yesterday. The benchmark interest rate was cut as expected to 4.1%, with surprises coming in the hawkishness of the statement and the accompanying press conference. RBA Governor Michelle Bullock implied that any further cuts in this cycle are far from guaranteed, and that she sees the current market pricing of additional cuts as much more confident in disinflation than she is at present. Economists are predicting that the next cuts are most likely being in May and/or August depending on upcoming data. Asian equities closed mixed with the Hang Seng finishing +1.6%, Nikkei +0.2% and the ASX 200 -0.6%. The biggest movers in commodities were Natural Gas +1.9% and Copper down -1.7%. Today, we have Wage Price Index q/q data expected at 0.8% as well as Chinese New Home Prices m/m.
USD
The AUDUSD opens at 0.6349, virtually unchanged from yesterday after trading sideways for the last 24 hours. Overnight, we saw the US Empire Manufacturing for February printed at 5.7, up from -12.6 and better than expectations of -2.0. A low-key session on Wall St. saw the Nasdaq trading -.3%, the Dow Jones -.2% and the S&P 500 unchanged entering the final hours of the North American session. Looking forward we have President Trump speaking on a Fox interview where traders are likely to pay close attention to any comments on policy that may have implications for the US financial markets. Also, we have the FOMC Meeting Minutes out early tomorrow morning.
EUR
The AUDEUR rate opens at 0.6080, slightly up from yesterday after German Feb ZEW Investor Expectations beat 20.0 estimates as they came in at 26.0, painting an optimistic outlook for the German economy. European equities were slightly up with the DAX and CAC gaining 0.2%. Today, we have the European Current Account out this evening where it's expected to increase by about 3B to 30.B. The rest of the week has little significant data apart from the French and German PMI’s out on friday this week.
GBP
AUDGBP opens at 0.5030, flat from yesterday's open despite seeing the UK jobs report for December come in stronger than forecasts, with the Unemployment Rate at 4.4% coming in better than expectations of 4.5% and the Employment Change +107k (exp. +48k) for the 3 months ending December. The Bank of England's Governor Bailey added commentary, noting the UK was facing a weaker growth environment and the difficulty that came with determining whether it was supply or demand induced. Overall, the main focus seemed to be on disinflation continuing. This brings close attention to the UK’s yearly CPI release out today which is expected to increase from 2.5% to 2.8%.
NZD
AUDNZD opens at 1.1133, up about 0.5% from yesterday’s open. Yesterday saw little data out with BusinessNZ Services Index printing at 50.4 and Visitor Arrivals m/m coming out at 3.5%. Later today, the RBNZ is widely expected to deliver its third consecutive 50 basis point cut. Although this rate cut is fairly agreed on by economists, investors will pay close attention to the statement that releases alongside the rate decision. The current stance is that with the presence of President Trump and the uncertainty that he brings to financial markets is bringing caution to the RBNZ monetary policy stance and will not want to cut too aggressively, too soon.