Aussie Dollar Drops Further As Bubble Fears Continue
AUD
The AUD has opened up lower against the majors after financial markets continue digesting the wobble in US tech stocks. Yesterday the Australian goods trade surplus widened significantly in September to A$3.94 billion, driven by a sharp rebound in exports (up 7.9% month-on-month) after a dip in August. Our key trading partner China has their trade balance dada which is expended to print at in line with previous forecasts. More importantly we have CPI and PPI Y/Y coming out of China over the weekend. Their CPI is expected to print at 0% after last reading was -0.3% A strong day for Asian equities saw the Hang Seng trade +2.1%, the Nikkei and Shenzhen both +1.4% each. Locally the ASX 200 climbed +0.3%, as materials and energy sectors led the pack at +1.4% and +0.8%.
USD
The AUDUSD opens lower at 0.6480 after despite comments from Chicago Fed President Austan Goolsbee. He has taken a cautious and moderately hawkish outlook, stating that while the labor market shows stability with an essentially unchanged unemployment rate and strong consumer spending, he is uneasy about inflation and cannot count on it being "transitory." Wall Street slid heading into the last hour of trade, driven by weak economic news. The Nasdaq led the decline, falling -1.2%, followed by the S&P 500 at -0.7% and the Dow at -0.5%. This broad market retreat came on the heels of news that US companies announced the most October job cuts in 22 years. Although data wise it continues to remain quiet as the US Government remains in lockdown.
EUR
The AUDEUR opens down by about 1% at 0.5612 after wobbling equities continue to sour risk sentiment globally. Yesterday they had a flurry of lower tier data with German Industrial Production printing at 1.3%, recovering from last month’s reading of -3.7%. Also, Eurozone retail sales came in at -0.1%. Equities took a bit hit with the DAX -1.3% and the CAC at -1.4%. Looking ahead we have German Trade Balance which is expected to come out at 16.7B.
GBP
The AUDGBP also opens down by 1% at 0.4934. The Bank of England's Monetary Policy Committee (MPC) voted overnight to hold the benchmark interest rate steady at 4%, a decision that was narrowly decided by a 5-4 vote. Four members pushed for a cut to 3.75%, however the majority opted for caution - primarily to wait for more concrete evidence that inflation is firmly on track to return to the 2% target and to assess the impact of the UK government's upcoming budget. BOE Governor Andrew Bailey stated that rates are still on a "gradual path downwards," and the committee's close split and new forecast that inflation has peaked have led financial markets to price in a strong possibility of a rate cut in December. The FTSE fell -1.3% in line with global equities. Tonight, we have their Halifax HPI (House Price Index) m/m which is forecasted to improve from -0.3% to 0.1%.
NZD
The AUDNZD opens flat at 1.1499, after a quiet 24 hours data wise. Their next key data release would be their inflation expectations due out early next week.