RBNZ Expected to Resume Interest Rate Easing Path

AUD

Overnight saw the Australian Dollar weaken across the board falling to a low against the majors. No noticeable Australian data this week. To equities, the Nikkei and Shenzhen trading -0.4% each, and the Hang Seng -0.2%. Locally the ASX 200 shed -0.7%. Markets are looking ahead to the Jackson Hole Symposium where global central banks will meet to discuss the current economic climate. Direction from Fed Chair Powell on where US rates are headed will be key. Australian and global markets are seeing a noticeable increase in volatility leading up to the meeting. Next week we see CPI y/y inflation data published on the 27th which is integral to the Reserve Bank of Australia to decide on monetary policy.
 

USD

AUD/USD falls almost half a cent to open lower at 0.6454, against yesterday's 0.6491. The US Dollar did gain strength against the AUD, the DXY up 0.15% measuring US dollar strength globally against a basket of currencies. Last night saw movement on Wall St with the big three indices dropping, Nasdaq 1.5% lower, while the S&P 500 and the Dow Jones closed -.6%, and -.1% respectively. No US data today. Tomorrow evening the US publishes Unemployment Claims, Flash Servicing PMI and Flash Manufacturing PMIs. Markets are currently pricing in 85% odds for the Fed to cut rates by 25bps in September, cutting from 4.25% to 4.00%. Market participants are waiting carefully for this weekend's Jackson Hole Symposium, hoping to glean insight from the US Fed Chair's commentary and any hints that could suggest the Fed's thoughts ahead of next month's US rate decision.
 

EUR

AUD/EUR opens lower at 0.5539 against yesterday's 0.5565 as the Europe market showed strength. European equities closed positively, the CAC +1.2% and DAX +0.4%. Tomorrow night, we see Europe publish Flash Services PMI and Flash Manufacturing PMI data with the forecasts slightly lower than last month, but no major deviation expected (Services sector expanding, manufacturing sector contracting). Germany and France will also publish their PMI data separately earlier in the evening.
 

GBP

AUD/GBP fell to 0.4784 from yesterday's 0.4807. The FTSE rose +0.2% overnight. This afternoon, we'll see UK CPI. Forecasts are at 3.7% y/y against the previous 3.6%, showing higher inflation pressures. Even though household energy bills have dropped, the CPI is expected to increase due to food prices.
 

NZD

AUD/NZD opens lower at 1.0948 against yesterday's 1.0965. Today, the Reserve Bank of New Zealand is largely expected to cut interest rates as markets almost entirely price in a 25bps cut from 3.25% to 3.00%. Following today's RBNZ decision, we expect to see an updated set of forecasts in the Statement of Monetary Policy. Recent soft labour-related indicators may suggest that a weakness in the NZ economy persists and contribute to further rate cut decisions. Tomorrow, RBNZ Governor Hawkesby speaks before the Finance and Expenditure Committee prevailing further insight into today's interest rate statement.