AUD Sinking Against Greenback
AUD
Rocky close to the week for AUD as bulls struggled to gain any traction. Asian equities finished Friday’s session in the red with the Hang Seng the worst performer down 1.5%. Energy stocks offset a 0.8% loss for the ASX with the index ending the week +4.5%, the largest weekly gain in 2 years. On the commodity front Gold, Silver and Iron Ore were all significantly on Fridays close. A relatively quiet week ahead for data in Australia where we get monthly updates on consumer and business confidence. Consumer confidence is likely to have remained subdued in early October. We will be watching the “time to buy a dwelling” measure closely to see if the modest improvement in September is sustained. NAB’s closely watched business survey suggested that business conditions remained strong through to August. This was in contrast to softer readings from other activity indicators (PMIs and Ai Group’s surveys) so there is a chance that ‘gap’ narrows somewhat in the September release. Meanwhile, RBA Assistant Governor (Economic) Luci Ellis will speak on Wednesday, though no topic has been published. China has CPI data coming out on Friday expected at 2.8% a 0.3% increase from previous.
USD
The US has strong employment report on Friday causing a solid dip in AUDUSD reaching new lows of 0.6362. US 2 year and 10-year yields rose 5 and 6bps respectively while the NASDAQ closed down 3.8%, the S&P 500 -2.8% and the Dow Jones -2.1%. Crude oil rose 5.1% to $93.10. The US economy added 263k jobs in September, down from 315k and slightly higher than expectations of 255k. The unemployment rate unexpectedly fell 0.2% to 3.5% against expectations of no change at 3.7% though the beat was partially offset by the participation rate falling 0.1% to 62.3%. There was minimal to no reaction seen to as expected Wholesale inventories data for August, which was released later on in the US session. The main event for the week is U.S. inflation for September on Thursday. The 7% decline in average gasoline prices recorded in September is expected to provide relief to headline inflation, which should nonetheless make a modest monthly gain. The market is expecting CPI to be firmer. Underlying inflation measures such as core services and median CPI are expected to continue to show strong mounting pressure.
EUR
AUDEUR held its ground over the weekend opening slightly above the 0.6550 handle this morning. European equities closed in the red on Friday Eurostoxx 50 down -0.5% on close. Earlier on in the session, German August retail sales fell 1.7% y/y, better than estimates of -4.1%. Again, in Germany, import prices rose 4.3% m/m in August, above a forecasted +2.2%, while Industrial Production m/m fell 0.8% (-0.5% expected). A very quiet week looking ahead for the Eurozone as we have a string of lower tier data backing any Euro strength. Thursday and Friday we have German and French CPI data which is expected at a 0% increase for both countries.
GBP
AUDGBP is on par from where is left on Fridays open sitting at 0.575. On and equities front the FTSE 100 closed -0.4% on Fridays close. BOE’s Ramsden hit the wires saying The BOE must stay the course on monetary policy, regardless of the difficult consequences the economy may face. He added that the UK energy bailout will add to inflation and that November’s questions will include what the revised outlook for demand is after the fiscal announcement. This statement was made ahead of the UK’s GDP figures which are coming out of Wednesday and are expected at 0% which is a 0.2% drop from its previous figures. Aside from that, Governor Bailey will speak on Wednesday followed by a string of lower tier data for the UK.
NZD
AUDNZD opening in on Monday with slight strength. Looking ahead we have another quiet week coming out of New Zealand. The REINZ housing price figures for September are likely to show ongoing solid declines and card spending figures for September will also be published. Closing off the week will be Business Manufacturing Index to be announced on Friday morning.