AUD Rebounds as Fed Cut Reverses Losses
AUD
The AUD opens flat overall against the major currencies, having fallen throughout yesterday's session before climbing this morning after the US Federal Reserve decided to hold their key interest rate. There was also minimal news for Australia released yesterday ahead of Australian employment figures and China's interest rate decisions today. Equities closed slightly down yesterday, with ASX -0.4%, Shanghai Comp -0.1% and Nikkei -0.2%. Commodities rocketed higher in contrast; the highest movers were Nat Gas +6.2%, Copper +2.0% and Coal +1.0%. Our employment data will release at 11:30am, with current expectations being new employment at +30.8k and unemployment holding at 4.1%. The stubborn unemployment rate is likely to reinforce bets on the Reserve Bank of Australia taking rate cuts slowly and potentially lend support to the AUD. Chinese 1-year and 5-year rates are expected to hold at 3.1% and 3.6% respectively. No more data releases for the rest of the week, with the next major piece for Australia being inflation figures on Wednesday.
USD
The AUDUSD opens flat at 0.6360, dropping overnight to 0.6320 before rising back to current levels after the US Federal Bank interest rate decision. The decision was the major American event of the night, with the bank holding interest rates at 4.50%. However, the Fed anticipates slower economic growth, and markets expect at least 2 interest rate cuts this year. Wall Street rebounded last night after their week of losses, with Dow Jones +1.2%, S&P 500 +1.3% and Nasdaq +1.7%. America will have Unemployment Claims tonight at 11:30 (expected to be 224k), alongside the Philly Fed Manufacturing Index and Existing Home Sales.
EUR
The AUDEUR opens slightly higher at 0.5830, trading between 0.5803 and 0.5832 over the past 24h. The Eurozone released minor inflation data last night, although the Euro ultimately weakened a little as markets bought the USD ahead of the Fed's interest rate decision. Recent strength is attributed to Germany’s economic reforms for infrastructure and defense. Last night also had the DAX closing -0.4% and CAC +0.7%. Today will have ECB President Lagarde speaking at 7pm at the European Parliament. No major data pieces until Monday night, with Flash Manufacturing and Services PMIs.
GBP
The AUDGBP opens flat at 0.4889, dropping to 0.4876 last night before rising to current levels today. The FTSE closed flat. It’s been a very quiet week so far for England, with no economic news all week, ahead of tonight's data dump. Tonight we will see employment and wage data released at 6pm, with current expectations being Unemployment Claims +7.9k and the 3-month moving average for wages increasing by 5.8%. Additionally, the Bank of England’s interest rate decision is at 11pm, with current expectations being 7 members voting to hold at 4.50% and 2 members voting to cut to 4.25%. No other news from England until Monday, with their Flash Manufacturing and Services PMIs.
NZD
The AUDNZD opens slightly lower at 1.0925. New Zealand’s quarterly GDP released at 0.7%, +0.3% higher than expected, with the economy crawling out of a technical recession (the previous 2 quarters had negative growth). The stronger-than-expected rebound in the economy has been attributed to improved agricultural production and tourism spending, however, the uncertain global outlook and impact of any tariffs on world growth is expected to weigh on business and household spending moving forward. The softening labour market will also contribute to this.