Subdued USD Firms as ECB Holds Rates

AUD

The AUD opens mixed against the major currencies, off the back of European Central Banks holding rates steady, and Trump's August 1 tariff deadline creeping closer. Asian equities finished the day positively with the Nikkei +1.6%, Shenzhen +0.7% and the Hang Seng +0.4%. The ASX closed -0.3% as industrials and real estate struggled -1.2% and -0.9%. Yesterday, RBA Gov Bullock spoke on inflation and employment. She noted that despite last month's surprise jump in the Unemployment Rate, the numbers matched the RBA's recent forecasts from May. She said 'leading indicators' of the labour market also suggested that the Unemployment Rate would not keep rising sharply in the near term. She also noted that monthly inflation data suggests the inflation rate may not fall as fast as forecasted in May. No Asian zone data of note, out yesterday or today. Locally, today minimal data, with our next key point top watch for is CPI q/q and y/y on Wednesday next week, expected at 0.9% and 2.1% respectively.
 

USD

AUD/USD opens weaker, minorly, despite seeing 8-month highs of 0.6625 yesterday afternoon. The USD firmed a little in the aftermath of the European Central Bank interest rate hold. A mixed session on Wall St. saw the Dow Jones close -0.7%, the S&P 500 +0.1%, and the Nasdaq +0.2%. Yesterday, US Flash PMI’s coming in mixed with Manufacturing missing by quite a way at 49.5 (exp 52.7) and Services the opposite at 55.2 (exp at 53.0). US weekly jobless claims dropped to three-month low. This evening, we're set to see Core Durable Goods Orders m/m and Durable Goods Orders m/m.
 

EUR

AUD/EUR opens flat from yesterday's open, retaining the 0.56 handle to start the day at 0.5610. European equities also closed mixed with the DAX up 0.2% CAC down 0.4%. A busy day for the euro yesterday, Flash PMIs all printed on or near expectations: services sectors expanding and manufacturing sectors contracting. After seven consecutive 25bp rate cuts and a total 200bps rate cuts in the current cycle, the European Central Bank held interest rates at 2.15% overnight, as expected, as Trump tariffs cloud outlook. The central bank said the Eurozone economy was so far 'resilient' partly due to a series of rate cuts by the bank. The bar for further rate cuts looks high, but a cut in September hasn't been completely ruled out, particularly given concerns about the stronger Euro and risks of inflation undershooting forecasts. Today, German ifo Business Climate and Spanish Flash CPI y/y out next Wednesday.
 

GBP

AUD/GBP opens stronger at 0.4880, continuing the week-long upward trend. The FTSE closed up 0.8%. The UK too saw their Flash Services and Manufacturing PMI’s data out mixed. GfK Consumer Confidence and Retail Sales m/m out today, nothing expected until some low currency impact data next Tuesday.
 

NZD

AUD/NZD opens stronger at 1.0923. A quiet back half of the week for the Kiwis. No data out to watch for until early August.