French Politics Delivers Some Euro Support
AUD
The Aussie Dollar opens mixed against the majors, with little in the way of data over the past 24 hours. A mixed day for Asian equities saw the Nikkei gain +1.8%, Shenzhen +1.5% and Hang Seng -0.3%. Locally the ASX 200 climbed +0.25%, as materials and consumer discretionary led the pack at +1.8% and +0.7%. Yesterday morning, MI Inflation Expectations for Australia were released showing the expected inflation rate rose by 0.1% in October to 4.8% for the year, suggesting increased consumer disagreement about the short-term inflation path. Expected wage growth also increased in October but remains close to its long-term average. This morning RBA Governor Michele Bullock is due to testify about the Supplementary Budget Estimate before the Senate, which could provide some keys into the central bank's rate decision before year-end. The light Australian economic data becomes more active next week with the RBA Meeting Minutes due next Tuesday and the September employment data at the end of next week.
USD
AUD/USD opens slightly down at 0.6555 this morning, with the USD strengthening overnight. Wall St. finished lower overnight with the Dow Jones trading -0.7%, the S&P 500 -0.4%, and the Nasdaq -0.2%. The US Government shutdown continues for another day leading to a dry spell of economic data. FOMC speeches continued overnight with Jerome Powell indicating that there are currently no risk-free pathways for the Fed and it is not incredibly obvious what to do with regards to inflation and unemployment. Looking to next week, Monday will be a Bank Holiday in the US for Columbus Day, Wednesday CPI m/m and y/y, Thursday Core PPI, Unemployment Claims and Core Retail Sales m/m.
EUR
AUD/EUR opens flat at 0.5669 after hitting an overnight high of 0.5690. The DAX closed at +0.1% and CAC at -0.2% overnight. In the absence of U.S. data, FX markets have been focused on French politics. News recently emerged that a new PM could be announced before the weekend. This has come as a surprise to a market that had felt that the next chapter in the French political saga could only be new and divisive elections. The euro has recovered on the news, which indicates that a budget deal may be in the works. Last night the ECB Monetary Policy Meeting Accounts revealed that there were no deviating views on the decision to keep rates on hold. Next week we have Eurozone Final Core CPI y/y.
GBP
AUD/GBP opens slightly up at 0.4928. The FTSE closed in the red at -0.4%. A rather quiet week for data out of London, next week will have a busier calendar for economic data. On Monday we have the Unemployment Rate, Thursday will be GDP m/m and Goods Trade Balance.
NZD
AUD/NZD continues to climb this week, opening at 1.1403, still hovering around the 3-year high. Next week we have the FPI m/m on Thursday which measures the change in price of food and services purchased by households.