First Post-Lockdown China Data Due Today

AUD

The Aussie Dollar is fighting the good and continues its gradual ascendance against all of its major trading peers, a sea of green for the AUD despite the relatively quiet session. The Aussie has been underpinned by risk appetite and equity markets that have been in demand as investors get encouraged by the gradual easing of the lockdowns in China. Asian equities were overwhelmingly higher on the close, with the Nikkei the top performer up +2.2%. The ASX finished Mondays session +1.45% lifted by a rally across the tech sector. Slim pickings in terms of data to start the week off, with the US on holiday, attention is focused on China. Analysts are noting that China are starting to ease lockdowns as COVID-19 cases fall, and it should help boost economic activity, not only in China, but also in the countries which rely on China for trade, which could help boost the Aussie in due time. There will be attention paid to today's data release in PMIs from China. Although both PMIs are likely to be contractionary, partial easing in lockdown measures will help reduce some negative sentiment in manufacturing and could give an early insight into recovery. There is a sprawl of less-notable data being released locally today, ahead of Quarterly GDP numbers released later tomorrow.

USD

The AUDUSD continues to leg up whilst the Yanks were away celebrating Memorial Day, briefly touching 0.72 before easing off to trade at 0.7191 this morning. With no data out of the US, the only notable tidbit from the US was Fed Speaker Christopher Waller saying he expects 50 basis point interest rate hikes to continue. Waller said he would support hikes that exceed the “neutral” level, currently pegged around 2.5% for the Fed’s benchmark borrowing rate, and added that he thinks the Fed can raise rates and bring down demand without causing a severe economic downturn. The US will slowly get into gear with handful of second-tier data tonight, with CB Consumer Confidence headlining before a litany of leading data later on in the week.

EUR

The AUDEUR only slightly better into the morning with some stronger than expected data failing to give some life to the flailing Euro, trading at 0.6676 at time of writing. European equity markets were little changed in late trade with the FTSE closing up +0.2% while gains of +0.7% were seen on the CAC and DAX. There looks to have been a shift in stance on raising interest rates within the ECB, as ECB Chief Economist Philip Lane hit the wires, saying that it is appropriate to end negative rates by the end of 3Q. Lane added that policy normalisation should be gradual, with 25bp hikes in July and September a ‘benchmark pace’. Eurozone May Economic Confidence has beaten expectations of 104.9 coming in at 105.0, whilst German CPI for May printed at 0.9% MoM and 7.9% YoY, higher than expectations of 0.5% and 7.6% respectively. The stronger than expected data was largely ignored by markets as the situation in Ukraine continues to be a thorn in the Euro's side. An assortment of data released tonight with both some preliminary Italian and French CPI data, neither should cause any major change in momentum.

GBP

The AUDGBP also gaining further traction as the Aussie resurgence continues, trading at 0.5685 this morning. The softer start to the week leaves the Pound clutching at straws with little to entertain markets. The Bank of England meets this month and there is speculation of a more hawkish reaction from the Old Lady. Nevertheless, signs of weakness in the UK April Gross Domestic Product data, due in the middle of June, or a softening in consumer sentiment surveys are likely to undermine the Pound. The quiet week will continue on with only few pieces of data, including Mortgage Approvals and Net Lending numbers to be printed this evening but will not capture imagination.

NZD

The AUDNZD capped off the last of the major trading pairs to be trading higher, 1.0970 the current trading rate. Reserve Bank of New Zealand Deputy Governor Hawkesby has crossed the wires stating that the central bank needs to tighten conditions past neutral of 2% and reduce stimulus. He forecasts a period of subdued consumption, whilst also noting that the risk of a recession is a possibility. It should remain a sleepy week on the data front from the Kiwis, look for data out of China to take charge.