AUD Firms as Inflation Resurges in July
AUD
The AUD opens up mildly against the majors after local CPI data came out hotter than expected yesterday. According to the Australian Bureau of Statistics, Australia's inflation rate unexpectedly climbed to 2.8% year-on-year in July, a significant jump from the 1.9% recorded in June. This increase in consumer prices was higher than the 2.3% that economist had predicted. Analysts believe there is a more than 70% chance that the Reserve Bank of Australia (RBA) will keep the cash rate unchanged when its board meets again at the end of September. Asian equities finished the day mixed, with the Shenzhen -1.5%, Hang Seng -1.3% and Nikkei +0.3%. Locally, the ASX 200 closed +0.3% as materials and healthcare sectors lead gains at +1.4% and +0.8. The biggest movers in commodities were Natural Gas -3.2% and Oil +1%. Local data seems quiet looking ahead, we have ahead it is Private Capital Expenditure q/q forecasted at 0.8% today at 11:30am.
USD
The AUD/USD opens slightly higher at 0.6509, continuing its slow rise to the highs of early last week. Equities saw Wall St. posted minor gains overnight with the Dow Jones closing +0.3%, while the Nasdaq and the S&P 500 both closed +0.2%. There has been minimal data out of the US so far this week. Although tonight we are set for Prelim GDP q/q forecasted at 3.1%, slightly higher than last printing 3%. We also have Unemployment Claims which are expected to remain unchanged at 230K due out tonight. Given the current uncertainty about the FED’s next rate decision, a big miss would result in impacts on currency markets.
EUR
The AUD/EUR opens up slightly by about 10 basis points at 0.5590. Yesterday, a joint report by NIQ/GfK and the Nuremberg Institute for Market Decisions (NIM) showed that consumer confidence in Germany is continuing to fall. Income and economic outlooks have worsened, and Germans are less willing to spend. The consumer climate indicator is forecasted to drop by 1.9 points to -23.6 in September 2025, down from -21.7 in August. Today we have a flurry of lower tier data due out. Equities saw the DAX -0.4% and the CAC +0.4%. We have European Private Loans y/y and M3 Money Supply y/y. Both are expecting to show slight increases although currency markets don’t tend to react to much. More importantly we have German Prelim CPI m/m due out tomorrow, analysts are forecasting a flat result, following a 0.3% rise in July.
GBP
The AUD/GBP opens flat at 0.4821. There has also been minimal data out of the UK. They had their CBI Realized Sales Survey, coming in higher than forecasts of -26, printing at -32. According to the latest Distributive Trades Survey from the Confederation of British Industry (CBI), retail sales volumes continued to decline sharply in the year to August, marking the eleventh month in a row of falling sales. Retailers, however, anticipate a slower rate of decline in September. The persistent drop in demand and overall negative outlook are negatively impacting retailers' plans for investment and hiring. Additionally, selling prices are increasing at their fastest pace since November 2023, indicating ongoing inflationary pressures. The FTSE was down 0.1%. Looking ahead data wise looks quiet until late next week where we have retail sales data.
NZD
AUD/NZD opens at 1.1109, up from yesterday, touching 1.1114 overnight, a rate unseen since February. Today we have ANZ Business Confidence which previously came out at 47.8. The week ahead looks very quiet as most of their higher tier data has already printed earlier in the month.