Rush for Trade Deals Ahead of Friday Deadline
AUD
AUD opens slightly lower against most majors (GBP excluded) after what were reasonably quite trading conditions on Friday night and into the weekly close. The ASX closed at -0.5% as materials and financials stocks shed -1.7% and -0.5% respectively. Asian equities also finished the week lower, Hang Seng -1.1%, Nikkei -0.9% and Shenzhen -0.5%. Commodities overall were mostly down with silver down -2.3%. The week ahead starts slowly for local economic data, however things heat up on Wednesday with Aussie quarterly CPI; the Trimmed Mean quarterly figure expected to remain steady at 0.7%. The RBA’s last rate hold decision was justified to allow the board to observe further data points before deciding on the timing of the next rate cut, so Wednesday’s CPI data point takes on extra significance as it is the last CPI data print before their next meeting in August. The next round of U.S.-China trade talks is scheduled now in Stockholm. According to U.S. Treasury Secretary Scott Bessent, the talks will focus on "working out what is likely an extension" of the trade war truce, which is set to expire on August 12. Any headlines of progress towards a new trade deal will be AUD positive.
USD
AUDUSD opens very slightly down at 0.6571 having bounced slightly off a low of 0.6551 early Saturday morning. US stocks closed in the green with the Dow Jones +0.5%, the Nasdaq +0.4%, and the S&P 500 +0.2%. President Trump has just announced a trade deal with the European Union which will see European imports tariffed at 15%, and the EU has agreed to spend heavily on US energy and military equipment. This week could be eventful on the trade tariff front, as the August 1 deadline for Trump's reciprocal tariffs is approaching. According to U.S. Commerce Secretary Howard Lutnick, August 1 will be a hard deadline for countries to "start paying the tariffs", though he also noted that "nothing stops countries from talking to us after August 1". Looking at data, and nothing due today for the US though Wednesday onwards will see some big data releases Wednesday’s Fed Rate decision (98% chance of rates to remain unchanged according to futures markets this morning), JOLTS Job Openings and ADP Non-Farm Employment Change on Friday.
EUR
In a familiar theme, AUDEUR also opens slightly down at 0.5590, with no movement observed from the EU-US Trade deal this morning. The deal came to fruition over Sunday night; with an agreement of almost all EU goods entering the U.S. will be subject to a 15% baseline tariff and the EU has also pledged to purchase $750 billion of US natural gas. On Friday the DAX closed down at -0.3% and CAC finished up 0.2%, perhaps Euro equities will open higher with the trade deal now complete. This week starts slow for Eurozone data but picks up Wednesday onwards with GDP’s, CPI’s and PMI’s released for the four major economies (German, Italian, French and Spanish).
GBP
AUDGBP bucks the trend to open up ever so slightly at 0.4892. The FTSE closed up at 0.2% on Friday. Today will see CBI Realized Sales which is a leading indicator of consumer spending forecasted at -28 and previous showing at -46. Overall, a quiet week ahead for the Pound.
NZD
AUDNZD opens rather flat at 1.0916, no big news over the weekend or to start the week. ANZ business confidence will be released on Wednesday and RBNZ Statement of Intent which provides insights into the bank's strategic priorities for the next financial year.