Aussie Dollar Suffers as American Recession Fears Loom

AUD

The Australian Dollar (AUD) dropped against all major currencies off the back of the release of a backlog of American economic data. The ASX 200 index closed up 1.2%, while the Shanghai Composite index closed down 0.4%. No domestic data is upcoming until Wednesday's crucial CPI y/y data; until then, the market's focus remains squarely on global risk sentiment.

USD

The AUD/USD cross opens significantly lower at 0.6442 due to a US government data dump, with the strong US Dollar dominating the market. This sharp risk-off environment saw the S&P 500 down 1.1% and the NASDAQ down 1.6%. This morning's US labor market figures were mixed but heavily influential: USD Non-Farm Employment Change came in sharply higher at 119K (massively beating the 53K consensus), USD Unemployment Claims were lower at 220K (beating the 227K consensus), USD Average Hourly Earnings m/m printed slightly softer at 0.2% (vs 0.3% consensus), and the USD Unemployment Rate ticked up to 4.4% (vs 4.3% consensus). Looking ahead, traders will focus on tomorrow's forward-looking manufacturing and services data, with consensus estimates for the Flash Manufacturing PMI at 52.0 (52.5 previous) and the USD Flash Services PMI at 54.6 (54.8 previous).
 

EUR

The AUD/EUR cross opens lower at 0.5589, continuing the broad-based weakness of the Australian Dollar against the backdrop of a firmer Euro. Eurozone equities are generally positive, with the DAX up 0.5% and the CAC up 0.3%. Tonight's focus is on the regional flash PMI releases, including the French Flash Manufacturing PMI (Forecast: 49.0, Previous: 48.8) and the French Flash Services PMI (Forecast: 48.4, Previous: 48.0), alongside the German Flash Manufacturing PMI (Forecast: 49.8, Previous: 49.6) and the German Flash Services PMI (Forecast: 54.0, Previous: 54.6), followed by the German ifo Business Climate next week.
 

GBP

The AUD/GBP cross opens lower at 0.4927, reflecting the continued generalised weakness of the Australian Dollar following the overnight global data dump. The FTSE 100 provided mild support for the Pound, trading up 0.2% overnight. Focus will be on today's UK data releases, including Retail Sales m/m (Forecast: 0.5%, Previous: -0.1%) and tomorrow's Flash PMI figures, with consensus expecting the Flash Manufacturing PMI at 49.3 (49.7 previous) and the Flash Services PMI at 51.9 (52.3 previous), ahead of Wednesday's tentative Autumn Forecast Statement.
 

NZD

The AUD/NZD cross opens lower at 1.1530, but is notable for seeing the smallest drop across all majors, suggesting the Trans-Tasman relationship is relatively more stable than the AUD's performance against global currencies. There were no major data releases overnight. We anticipate focus to shift to upcoming RBNZ releases and the overarching impact of Wednesday's Australian CPI.