AUD Takes Breather on Sluggish Growth Figures

AUD

The Australian Dollar opened this morning mixed against the majors, taking a breather yesterday after four straight sessions of gains, with data pointing to modest economic growth at home and the need for further policy easing from the Reserve Bank of Australia. Figures showed net exports added a slim +0.1% to GDP in Q2, while government spending contributed nothing at all. The full GDP report is due today. A mixed day for Asian equities saw the Nikkei trade +0.3%, while the Shenzhen lost -0.7% and Nikkei -0.5%. Locally, the ASX 200 ended -0.3%, with consumer discretionary and consumer staples sectors shedding -1.9% and -1.7%. Australian GDP q/q data headlining the market today. GDP forecasts revised down from +0.6% down to 0.4% as preliminary measurements expect softer growth with economists citing a lack of support due to reduced government expenditure. This upcoming GDP release will be crucial in seeing early expectations for the Reserve Bank of Australia's September 30 interest rate decision. Later tonight will also see RBA Governor Bullock speak and the market will have all eyes on in anticipation of any insights to the RBA's reaction from today's GDP news.
 

USD

AUD/USD fell sharply to open at 0.6518 against yesterday's open 0.6554. The US Dollar did gain strength across the board yesterday with the DXY up +0.63% presenting stronger US dollar globally as its measured against a basket of currencies. US equity markets were down with the Nasdaq -0.8%, S&P 500 -0.7% and the Dow -0.5%. Overnight ISM Manufacturing PMI data at 48.7 up against last release of 48.0, short of 0.49 expectations, remaining in contractionary territory. This week's most pivotal US release will Non-Farm Employment Change on Friday. Any weakness or reduction in job openings could indicate a cooling labour market. With the US Fed meeting mid-September to deliberate on monetary policy this will also be crucial in markets anticipating if the US will finally be getting it's long expected rate cut (currently the 25bps interest rate cut is widely expected by markets).
 

EUR

AUD/EUR opens flat at 0.5601 from 0.5596 yesterday. European equities opened negatively, the DAX trading -1% and the CAC -0.1%. Overnight saw the EURO down sharply before recovering lost ground to trade mostly flat compared to yesterday. Core CPI Flash Estimate y/y printed at +2.3% up slightly over forecasts of 2.2%. ECB President Lagarde speaks 5:30pm tonight in Frankfurt, Germany.
 

GBP

AUD/GBP opened at a 3-week high this morning at 0.4871 from yesterday's 0.4838 open. London's FTSE traded -0.4%. The pound crashed last night amidst UK debt concerns with a lack of confidence in the UK government's fiscal strategy - arising due to talk of possible tax hikes. No data printed overnight. Tonight, we will see the UK Monetary Policy Report Hearings - any insights into government strategy should be receiving attention from markets.
 

NZD

AUD/NZD trades well up 1.1121 from yesterday's 1.1103. The Overseas Trade Index q/q printed at +4.1% up massively and coming as a surprise against forecasts of +2.0%. Economists say this isn't all positive news as New Zealand’s data showed export volumes fell and import volumes rose. The Reserve Bank of New Zealand has continued its dovish tone as they see a need for monetary policy to be more stimulative considering the amount of slack within the local economy.