AUD Slides as Ukraine Peace Talks Evaporate
AUD
The AUD has declined across all major currencies in the last 24hrs despite significantly stronger-than-expected Employment data yesterday, the drop largely driven by weaker-than-expected Chinese economic data and a setback in Russian/Ukraine peace talks which dampened risk sentiment. Equity markets showed mixed performance with the ASX posting a modest 0.2% gain, while the Shanghai Comp fell by 0.7% overnight. To yesterday's jobs report, and the economy reported an increase of 89k new jobs, well above the expected 20.9k. The Unemployment Rate itself held steady at 4.1%, the increase in jobs were offset by an increase in the participation rate which increased to 67.1% (the size of the labor force increases when the participation rate increases which is why the new jobs were absorbed without change to the Unemployment Rate). No local data to be released today, the next major local data point will be Tuesday's RBA interest rate decision.
USD
The AUDUSD opens lower at 0.6403 this morning after Fed Chair Jerome Powell stated last night that U.S. monetary policy would remain unaffected by trade tensions, reducing expectations of tariff-driven rate cuts and strengthening the U.S. dollar. U.S. equities showed mixed results with the NASDAQ falling slightly by 0.2% while the S&P 500 rose by 0.4%. A wealth of data was released from the U.S. last night including Core PPI, which revealed a significant drop in inflationary pressures. Core PPI m/m fell by 0.4% and headline PPI m/m dropped 0.5%, both well below expectations. Retail sales data was mixed with Core Retail Sales rising by just 0.1%, missing the forecast of 0.3%, while headline Retail Sales met expectations at 0.1%. Unemployment Claims remained steady at 229K in line with forecasts, suggesting stability in the labor market despite softer inflation and spending data. No major data being released today but we will see Prelim UoM data released tomorrow afternoon regarding consumer sentiment and inflation data.
EUR
The AUDEUR has continued to trade lower from Wednesday's highs, opening this morning at 0.5719, largely driven by a reduction risk sentiment and positive economic data from the EuroZone. Both main Euro equity bourses gained off the positive data with the DAX growing by 0.7% and the CAC by 0.2%. To the data and it was European Industrial Production and Employment data which both outperformed expectations, capped off by a solid Final GDP number from France. Today is expected to be relatively quiet with only trade balance data scheduled for release, likely to have a limited impact on the broader market.
GBP
The AUDGBP opens this morning at one-week lows of 0.4812 following the overnight release of stronger than expected UK GDP m/m data which showed a 0.3% growth signalling economic resilience in the UK and strengthening the British pound against the Australian dollar. British equities, FTSE, saw a 0.6% jump from yesterday reflecting positive market sentiment. Over the next couple of days the UK economic calendar is relatively light with no major data releases scheduled until the 21st.
NZD
The AUDNZD has largely maintained recent gains, opening close to 6 week highs at 1.0898. New Zealand's quarterly Inflation Expectations are due at 1pm today, markets expecting a figure of 2.06%. Sometimes expectations of future inflation can manifest into actual inflation because workers tend to push for higher wages when they believe prices will rise.