AUD Holds Tight Range Ahead of RBA Call
AUD
AUD opens flat against the majors, slightly down against the US Dollar, holding a tight range as markets await the Reserve Bank of Australia's interest rate decision this afternoon. Asian equities finished the day in the green, with the Nikkei trading +1.9%, Shenzhen +0.4% and the Hang Seng +0.2%. The ASX 200 climbed +0.4%, as materials and health care sectors ended +1.6% and +0.6%. From the RBA this afternoon, a 25-bps rate cut is assumed to already be a done deal, the question is what comes after that. Markets are currently pricing over 100% odds of the 0.25% cut, meaning there's a small allowance for a potential 50bps cut. This comes following the RBA's surprise decision to hold the Cash Rate at 3.85% 5 weeks ago. Since this decision, domestic inflation has printed lower and the Unemployment Rate has increased. There will be a microscope on Governor Bullock’s comments at this afternoon's press conference to see if there is cause to expect additional easing later in the year. A relatively large data week for Australia as tomorrow we have the Wage Price Index q/q, followed by the Unemployment Rate on Thursday.
USD
AUD/USD traded in a 0.6501 - 0.6528 range before settling at 0.6514, with the Greenback edging higher ahead of tonight's U.S. inflation report which could help determine whether the Federal Reserve will lower borrowing costs next month. A relatively slow session on Wall St. ultimately finished in negative territory with the Dow Jones closing -0.5%, the Nasdaq -0.4%, and the S&P 500 -0.3%. This morning, Trump signed an executive order extending the deadline to tariffs on Chinese imports for another 90 days. If it wasn’t extended, tariffs on Chinese goods would have shot up to 145 per cent. Later tonight, the US Consumer Price Index is to be released and is already shaping up to be a high-profile affair due to the expected impact of Trump’s hefty tariffs. On Thursday we have Core PPI m/m, PPI m/m and Unemployment Claims.
EUR
AUD/EUR opened flat at 0.5607. European equities closed in the red with the DAX closing at -0.3% and the CAC at -0.6%. A relatively quiet week out of Europe data-wise, the main point of interest will be on Thursday with the Eurozone Flash GDP q/q, French Final CPI m/m and Eurogroup Meetings. The Eurogroup coordinates economic policies of the 19 euro area member states, and their initiatives and decisions can have a widespread effect on the Eurozone's economic health.
GBP
AUD/GBP opened flat at 0.4849 and has been trading sideways recently. The FTSE closed +0.4%. Big week for UK data as this afternoon we have labour data, tomorrow GDP m/m, Goods Trade Balance and many minor data points. The Unemployment Rate is forecasted to remain unchanged at 4.7%.
NZD
AUD/NZD opens slightly up at 1.0967. Quiet week for NZ data this week. On Friday, we have FPI m/m, Visitor Arrivals m/m and BusinessNZ Manufacturing Index. Tourism plays an important role in the economy as about 7% of the population is employed by the tourism industry, and a sizable portion of the nation's GDP is indirectly related to tourism.