Antipodeans Find Support in U.S. Rate Cut Wagers

AUD

The AUD held a tight range against most majors, supported by mounting expectations of a U.S. interest rate cut, undermining the Greenback and offsetting loose policy from the RBA. Australia had the Wage Price Index q/q release at 0.8% (meeting expectations), while Chinese New Loans released at -50B vs. expectations of 305B. On equities, the ASX closed -0.6%, Shanghai Comp +0.5% and Nikkei 1.3%. Commodities also closed mixed, with the largest movers being Nat Gas +1.3% and Cotton -1.0%. Today will have Australian employment data at 11:30am, with Employment Change expected at 25.3K and Unemployment Rate expected to tighten to 4.2%, from 4.3%. The monthly data can be highly unpredictable, so shocks are common. A further lift in unemployment from the current 4.3% will strengthen the case for another cut from the RBA in September. No other major economic data will be expected out of Australia, but China has Industrial Production y/y and Retail Sales y/y.
 

USD

The AUD/USD opens at 0.6545, reaching highs of 0.6561 with the Greenback softening due to increasing chances of a US Federal Reserve interest rate cut. US President Trump has specified that the replacement for Chairman Jerome Powell would be tasked with reducing interest rates, while the Federal Reserve is also expected to cut interest rates before then as well. Wall Street closed higher last night, with Dow Jones +1.0%, S&P 500 +0.3% and Nasdaq +0.1%. Yesterday did not have any major economic news out of America, however, tonight will have inflation and unemployment data.
 

EUR

The AUD/EUR opens flat at 0.5590, with minimal news out of Europe yesterday. German inflation was released slightly lower than expected, while their equities closed higher – the DAX at +0.7% and CAC +0.7%. There will be some minor employment data from the Eurozone tonight, however, it will be a quiet week due to an Italian/French bank holiday tomorrow. The next key European data piece is next Thursday, with Manufacturing and Services PMIs out of the Eurozone.
 

GBP

The AUD/GBP opens at 0.4825, dropping from highs of 0.4843 overnight. British equities closed slightly higher with the FTSE +0.2%. Today will have English GDP m/m, with expectations of 0.2%. No other news for the rest of the week out of the United Kingdom.
 

NZD

The AUD/NZD opens lower at 1.0952, having traded between 1.0941 and 1.0983 for the week to date. Both currencies have found support from mounting expectations of an interest rate cut from the Federal Reserve in September. There have been no economic data for the week so far, however tomorrow will have food price and visitor data. The next economic data piece is next Wednesday, with the RBNZ interest rate decision.