USD Recovers from Powell's Dovish Surprise

AUD

The Aussie Dollar opens higher against most majors, clinging to gains as investors bet in U.S. rate cuts, with markets also awaiting the RBA meeting minutes later this morning. Asian equities finished yesterday positively with the Shenzhen +2.1%, Hang Seng +1.9%, and Nikkei +0.4%. The ASX 200 closed +0.1% as materials and energy sectors lead the pack at +2.7% and +1.1%. Markets will closely analyse the RBA Meeting Minutes today to assess how united the board was on the decision to lower the cash rate earlier in the month, as well as whether further cuts are likely in the near term. Tomorrow, we have CPI y/y releasing, which is forecasted currently at an increase of 2.3%. The rest of the week will be pretty quiet in terms of domestic data.
 

USD

AUD/USD opens flat at 0.6482, trading in a range of 0.6505/6477 over the past 24 hours. The USD has rebounded from the slump spurred by Fed Powell's dovish surprise over the weekend which saw widely increased expectations of a U.S. interest rate cut in September, which would be the first cut this year. A softer start to the week saw the Dow Jones close -0.8%, the S&P 500 -0.4%, and the Nasdaq -0.2%. The USD is showing signs of recovery as traders await key US data releases later in the week, including Durable Goods Orders and CB Consumer Confidence this evening. Core Personal Consumption Expenditure (PCE) inflation and weekly Initial Jobless Claims will also be seen later in the week. Softer inflation readings and poor labour market data could reinforce expectations for a September Fed rate cut.
 

EUR

AUD/EUR opens in the green trading at 0.5580 this morning, up 40 points. Overnight the German ifo Business Climate and Belgian NBB Business Climate were released which may not move the needle all too much but have indicated that any upturn in the economy remains sluggish. European equities closed in the red with the DAX at -0.4% and CAC at -1.6%. Looking ahead we have the ECB Monetary Policy Meeting Accounts on Thursday and some Prelim Eurozone CPI and GDP data releasing Friday.
 

GBP

AUD/GBP opens slightly up at 0.4817 following a bank holiday for the UK on Monday. The FTSE closed +0.1%. A quiet week ahead for the Pound with nothing major in terms of economic data expected. MPC Member Mann is to speak overnight at the Bank of Mexico Centennial Conference and could drop some clues about future monetary policy.
 

NZD

AUD/NZD opens slightly up at 1.1079. The pair seems to be holding steady following last week's rate cut from New Zealand. A quiet week for data in New Zealand with little of note except the ANZ Business Confidence, on Thursday morning, which can be a good litmus test for economic health.