AUD Holds Recent Gains

AUD

The Australian Dollar opens fairly flat from Friday's close, having held on to most of the gains from what was a very good week for the Little Battler. Friday's local data from China's central bank reported new loans issued by Chinese banks in August totaled 590 billion yuan ($82.84 billion) which follows a 50-billion-yuan contraction in July, which was the first monthly decline in two decades. This is likely due to the ongoing real estate crisis and the government's efforts to curb excess industrial production, both of which are weakening the demand for credit. Asian equities finished the day mixed, Hang Seng +1.2%, Nikkei +0.9%, and Shenzhen -0.6%. The ASX 200 climbed +0.7% as materials and real estate lead the pack at +1.45% and +1.30%. Commodities were fairly mixed with the biggest movers being Gas up 1.2% and Silver up 1.4%. As I write, China's Retail Sales and Industrial Production figures have both missed expectations which could provide early headwinds for the AUD this week. Looking ahead, Thursday's Aussie Employment data is the main event for a week that will be dominated by overseas central bank decisions (see below).
 

USD

The AUD/USD opens at 0.6653, only slightly off Friday's fresh yearly highs. On Saturday, data from the University of Michigan showed that consumer sentiment missed forecasts of 58.2, coming in at 55.4. After declining in August, consumer confidence worsened again in September. This drop in sentiment was fueled by new government data showing that hiring was slowing down while inflation was on the rise, sparking worries about a potential period of "stagflation." The University of Michigan's survey data revealed that this two-month slide in consumer attitudes continued a trend that began after President Trump took office. Although sentiment briefly improved, it has now fallen back below the level it was at in December, before his inauguration. At its lowest point, consumer confidence was nearly as bad as it was during a period of high inflation three years ago. A mixed session on Wall Street saw the Nasdaq close up 0.4%, the S&P 500 unchanged, and the Dow Jones down 0.6%. Tonight, we have Empire State Manufacturing Data out of the U.S., where it’s expected to print at 4.5, much lower than last month’s reading of 11.9. The main event for the week is The Fed's rate call on Wednesday evening from which markets are expecting a 25 bps cut. Whilst there have been some arguments for a super-sized 50 bps cut, this remains a heavy outside bet according to futures markets.

EUR

The AUD/EUR pair opened flat over the weekend at 0.5674 after German and French inflation data (CPI) came out as expected at 0.4% and 0.1%, respectively. European equities were also steady with the DAX and CAC stock indexes both flat. This week, we have a flurry of lower-tier data, starting with more trade balance data today. The main events to watch for will be ECB President Christine Lagarde, who is scheduled to speak on both Tuesday and Wednesday.

GBP

The AUD/GBP opened flat at 0.4907 after the U.K.'s monthly GDP data showed 0.0% growth, a dissapointing number that was however widely expected. The slowdown follows a 0.4% expansion in June, and was mainly due to a 0.9% drop in production output, while the services and construction sectors saw small increases. This follows a period of stronger-than-expected growth earlier in the year, with a 0.3% expansion in the second quarter and a significant 0.7% increase in the first quarter. According to economists, the U.K. is now expected to face a slower second half of 2025 after leading the G7 countries in growth during the second quarter. Later in the week, the Bank of England’s rate decision is expected to result in the rate remaining unchanged at 4.0%. The FTSE was down 0.2%.

NZD

AUD NZD opens up slightly over the weekend at 1.1168 which is fresh 7 month highs. Today Business NZ Services Index data came out at 47.5, slightly down from last reading of 48.9. Later in the week we have their quarterly GDP print which is expected to heavily contract from 0.8% to -0.3%. This being their biggest data event until their rate decision on October 8th makes the reading critical as investors aim to gauge the RBNZ’s policy stance moving forward.