Trade Uncertainties Remain Headwind for AUD
AUD
The Aussie Dollar has come under broad pressure as the USD rebounds in a choppy market, with global trade uncertainties continuing to pose a threat to the AUD. We saw a brief spike yesterday with Australia's quarterly Wage Price Index printing at 0.9%, slightly above expectations of 0.8%. This marks a recovery from the previous quarter, which recorded the slowest wage growth since Q3 2022. We also saw Chinese New Loans coming in at 280B missing expectations of 710B. Asian equities were mostly higher on Wednesday led by the Hang Seng, up +2.3%, and the Shenzhen, up +1.2%, as the Nikkei closed -0.1%. The ASX was steady, +0.1%, with gains in energy offset by losses in utilities. Commodities were mainly down with the biggest movers being Silver -2.2%, Gold -2.1% and Copper -1.8% hinting at the possibility of improving risk sentiment. More Aussie jobs data today, where Employment Change m/m is expected at -12k, partly due to slower labor and population growth. While participation rate shifts could cause volatility, steady job ads suggest the Unemployment Rate will remain unchanged from March's 4.1%. Such an outcome would likely reinforce the RBA's view of a tight labour market. Markets will be paying close attention to the figures released with the RBA set for their Cash Rate decision on Tuesday.
USD
The AUDUSD opens lower by about half a percent at 0.6424 after getting close to the 0.65 level late yesterday evening. The main driver was news coming out of the US that they were not willing to weaken the USD’s currency strength as part of ongoing trade negotiations. Wall St. remained steady late in the day with the Nasdaq trading +.7%, the Dow Jones -.2%, and the S&P 500 unchanged on the day. In terms of data there was not much out yesterday, although we are set for an abundance of key figures out tonight. US PPI for April is released tonight, with core components watched as an early inflation indicator (consensus +0.3% MoM). Also, US Retail Sales (expected flat). Tonight will offer insight into April consumer spending and 2Q GDP growth expectations. Furthermore, we have Unemployment Claims being released which is expected to remain unchanged at 228K. Fed Chair Powell will also be speaking at a conference in Washington DC.
EUR
The AUDEUR opens lower at 0.5743 after slowly sliding from yesterday’s open. In terms of data, yesterday we had German Final CPI m/m printing in line with the forecast of 0.4%. Equities were down with the DAX and CAC both -0.5%. This afternoon we are set to see a French Final CPI m/m, Eurozone Flash GDP and Industrial Production. Although the lower tier data doesn't seem to have much of an effect on currency markets.
GBP
The AUDGBP opens slightly lower at 0.4843 after gradually falling from yesterday's weekly highs. The FTSE was slightly down by -0.2%. Yesterday there was no data released although the UK's Q1 GDP data is due, with economists anticipating a 0.6% q/q increase, largely fueled by strong February manufacturing and services output (+0.5% m/m). However, this near-term growth is expected to be temporary due to tighter fiscal policy and weaker global activity linked to US trade policy uncertainty, which are projected to dampen growth in subsequent quarters.
NZD
The AUDNZD opens down a tad at 1.0894. This morning, we had the FPI m/m come in at 0.5%, slightly above expectations. Tomorrow, we have inflation expectations which previously printed at 2.06%.