AUD Slumps as Markets Expect Further RBA Cuts

AUD

The AUD opens weaker across the board after the Reserve Bank of Australia cut the Cash Rate by 25 basis points to 3.85%, as expected, with the Board's commentary indicating the central bank has no intention to stop the easing cycle here. Markets are pricing 37bps of cuts by the 12 August meeting, and nearly 3 cuts by the end of the year. The RBA also revised inflation and growth forecasts downward, as well as projecting higher unemployment, with the AUD weakening in the aftermath. The Board considered cases for an interest rate hold, 25bps cut and 50bps cut, but the ultimate decision was unanimous. China also cut the 1Y and 5Y Loan Prime Rates by 0.1% to 3% and 3.5% respectively. Asian equities finished the day higher with Hang Seng +1.5%, Shenzhen +0.8% and Nikkei +0.1%. The ASX 200 finished +0.6% as real estate lead gains +1.4%., spurred by the RBA’s 25bps cut to 3.85% hours earlier. Today, we'll see the Melbourne Institute Leading Index. Flash PMIs are set for release tomorrow morning.
 

USD

AUDUSD opens lower, losing 30 pips from yesterday to open at 0.6424. A soft session on Wall St. saw the Nasdaq and the S&P 500 close -0.4%, while the Dow Jones closed -0.3%. Yesterday saw an array of FOMC Members speak with little notable commentary. A quiet week in terms of US data. Unemployment Claims set for release tomorrow, expected at 230k, Flash Manufacturing and Services PMIs also out tomorrow and expected at 49.9 and 51.0 respectively.
 

EUR

AUDEUR loses the 0.57 handle overnight to open at 0.5692. The DAX and CAC closed +0.4% and +0.7%. The ECB Financial Stability Review will be released this evening. Eurozone Flash PMIs are set for release tomorrow.
 

GBP

AUDGBP opens the day weaker at 0.4796, losing 50 pips overnight. The FTSE closed +0.9%. Major data out of the UK today with CPI y/y forecasted at 3.3% previously at 2.6%. Tomorrow, we have Flash Manufacturing PMI and Flash Services PMIs expected at 46.2 and 50.0 respectively.
 

NZD

AUDNZD opens weaker at 1.0838. This morning, the NZ Trade Balance printed at 670M and the GDT Price Index fell -0.9% in the past month. Credit Card Spending y/y will be released later today. Tomorrow, the Annual Budget will be released.