USD Strengthens as Household Spending Holds Firm
AUD
The Aussie Dollar continues its downward trend, opening largely down against the majors this morning. Commodities performed largely better yesterday with Copper +2.6%, Iron Ore -0.3%, Silver +0.5%, and Gold +1.1%. Asian equities saw a mixed performance with the ASX -0.5%, Shanghai Comp -1.3%, and the Nikkei -0.7%. No news from Australia today, however, all eyes will be on China’s Q1 2024 activity with Industrial Production y/y, GDP q/y and Retail Sales y/y set for release at noon. China's economy has remained in a two-speed recovery mode in 1Q24. The bright spot is the external demand, with the strengthening US economy as the main driver. Meanwhile, the property sector continued to decline while consumers remained cautious. With robust external demand and soft domestic demand, 1Q24 GDP growth is on track to reach near-5% y/y.
USD
The AUDUSD once again takes a hit, opening lower this morning at 0.6441 after what was a busy night for the USD. The Greenback made gains after US Retail Sales for March rose by 0.7% m/m (exp. 0.4%) with Core measures also much better than expected with positive revisions. The headline figure was given a lift by rising gas prices, although increased online shopping was the main contributor with US consumers undeterred by rising inflation in March. The Empire State Manufacturing Index printed at -14.3, up from -20.9 though short of expectations of -5.2. Also, early this morning, Federal Reserve Bank of New York President John Williams said the central bank will likely start lowering interest rates this year if inflation continues to gradually come down. Wall Street took a hit closing in the red with the Dow Jones -0.7%, S&P 500 -1.2%, and the Nasdaq -1.8%. Looking ahead it will be another busy night for the US, with Building Permits, Industrial Production m/m, and Fed Chair Powell Speaking.
EUR
The AUDEUR took a slight tumble last night, opening lower this morning at 0.6061 after Eurozone Industrial Production m/m came through as forecasted at 0.8%. Eurozone equities closed in the green with the DAX and CAC up 0.5% and 0.4% respectively. Only some minor releases today out of the Eurozone with Italian Trade Balance, Trade Balance, German ZEW Economic Sentiment, and ZEW Economic Sentiment set for release at 7pm. We will also hear from German Buba President Nagel early in the morning.
GBP
The AUDGBP loses its 0.52 handle, opening lower this morning at 0.5172 after MPC Member Breeden’s speech last night which didn’t really provide any updates on future monetary policy. Looking at UK equities, the FTSE closed in the red -0.4%. We have a few major releases out of the UK today at 4pm with Claimant Count Change which is expected to increase from 16.8k claims to 17.2, Average Earnings Index 3m/y which is expected at +5.5% and the Unemployment Rate which is expected to increase from 3.9% to 4%. Overnight, we will also hear from BOE Gov Bailey at the International Monetary Fund Spring Meeting in Washington DC. Tomorrow will however be the main event as we will see the CPI y/y out of the UK, which is expected to drop from the previous 3.4% to 3.1%.
NZD
The AUDNZD coupling regains its 1.09 handle, opening higher this morning at 1.0910. No news set for release for our Kiwi neighbors today, however, tomorrow we will see their CPI q/q release which is forecasted to increase from 0.5% to 0.6%. We might also get the release of their GDT Price Index which is set as tentative.