AUD Shuns Soft GDP Figures
AUD
The AUD opens either flat or a little higher against most majors, seemingly undeterred by Australia's weaker GDP figures yesterday. The release yesterday revealed that Australia's economic growth in the first quarter of the year was weaker than anticipated. On a quarterly basis, the economy grew by 0.2% (the slowest pace in three quarters), half of the 0.4% that had been expected, as growth faltered amidst ongoing global trade disputes. The annual growth rate was 1.3%, steady but below the 1.5% estimate. Weak GDP data could encourage the Reserve Bank of Australia (RBA) to cut interest rates, arguing that ongoing economic uncertainty might lead households to increase savings and reduce spending, justifying a rate cut to stimulate the economy. After the data release, futures markets price 82% odds of a 25bps cut from the RBA in July, up from 70% odds prior to the release. Asian equities finished in positive territory with the Shenzhen and Hang Seng +0.3%, and Nikkei +1.4%. The ASX 200 had a positive session +0.9%, as energy and consumer discretionary had driven gains. Commodities were fairly flat with Crude Oil -1.1% and Copper up 1.3%. Locally the rest of the week looks quiet apart from our Goods Trade Balance out at midday today.
USD
The AUDUSD opens up at 0.6490, lifting by nearly a percent from the overnight lows after they had a big miss on U.S ADP Employment for May, which printed softly at +37k against +114k expectations. Shortly after in a series of social media posts, President Donald Trump expressed his frustration with FED Chair Jerome Powell. Citing new data showing the weakest private job growth since March 2023, Trump argued that the Fed must immediately lower interest rates to make borrowing easier and stimulate the economy. He criticized Powell as being "'Too Late'" and inaccurately claimed Europe had cut interest rates nine times to support his case (it's been 7 times in 13 months). The ISM Services PMI also missed printing at 49.9 below expectations of 52.0. Equities saw another subdued session on Wall St with the Nasdaq close +0.3%, the S&P 500 -0.1%, and the Dow Jones -0.2% Looking ahead we have US Unemployment Claims which are expected at 236K, essentially in line with last week's print. Tomorrow evening will hold the closely watched Non-Farm jobs report.
EUR
The AUDEUR opens flat at 0.5683 with nothing of significance released over the past 24h. We saw a flurry of services PMIs come out across Europe which were mainly better than expectations, although Germany's printed in line with expectations. The DAX closed +0.8% and the CAC was +0.5%. Tonight, we have the European Central Bank's interest rate decision where they are widely expected to cut their Main Refinancing Rate by 25 basis points from 2.4% to 2.15%. Based on their analysis of the ECB meeting on April 17, economists concluded that the central bank's priorities have changed. They observed that the ECB is now less concerned with the risk of ongoing high inflation and is instead more focused on the threats to economic growth, hence their commentary will remain key as markets attempt to gauge their next set of priorities.
GBP
The AUDGBP opens up by about 20 basis points at 0.4790 despite seeing their Services PMI print mildly better than expected at 50.9. The FTSE was up by 0.2%. Today we have the UK’s Construction PMI which is expected at 47.4 slightly up from last printing of 46.6. The rest of the week remains quiet.
NZD
The AUDNZD opens flat at 1.0768. Today, we have ANZ Commodity Prices m/m which previously printed flat. The next piece of data is NZ Manufacturing Sales q/q due out Monday.