Dollar Drops as Fed Eyes Jobs Data

AUD

Souring risk sentiment was offset by a stronger-than-expected domestic GDP report, seeing the AUD open flat against all majors bar the USD, with the Greenback weakening following dovish commentary from Fed Member Waller overnight. The ASX 200 ended -1.8%, with technology and financial sectors leading losses at -3.9% and -2.8%. Asian equities finished down with the Nikkei -0.9%, Shenzhen -0.7% and Hang Seng -0.6%. Surprise GDP figures yesterday showed the Australian economy expanding more than expected in Q2, marking the fastest pace of growth since September 2023. GDP grew 1.8% year-on-year, higher than the 1.6% expected by economists and higher than the 1.3% seen in the Q1 report. The figure was driven by domestic spending, including household consumption. However, public demand was flat and net trade contributed modestly to growth, led by exports of mining commodities. Later this morning, RBA Deputy Governor Hauser will speak in an interview with Reuters. We'll see the Aussie Trade Balance after that, then no domestic data for the remainder of the week.

USD

AUD/USD opens 0.45% higher at 0.6541, with the USD falling after the Fed's Waller hit the wires indicating he thinks rates should be cut at the next FOMC meeting (in two weeks) and that there should be multiple cuts over the next few months to get ahead of a slowing labour market. He also said that tariffs are not going to cause long-run inflation. A steady session on Wall St. saw the Nasdaq close +1%, the S&P 500 +0.5%, and the Dow Jones unchanged. Softer jobs data also didn't help the USD, with weakening labour market conditions supporting investor expectations of U.S. monetary policy easing by the Fed in two weeks. JOLTS Job Openings printed at 7.18M, short of 7.38M expectations and lower than last month's 7.36M release. With the Fed focused on jobs data, tonight's ADP Non-Farm Employment Change and Unemployment Claims (as well as Friday night's Non-Farm Jobs report) are set to impact the USD if the data lands off-expectations. 
 

EUR

AUD/EUR touched 1-month highs of 0.5616 overnight before falling off to open at 0.5609, being flat on yesterday's open. The DAX and CAC ended the session +0.5% and +0.9% respectively. Eurozone producer prices ticket up with the monthly PPI figure printing at +0.4% (expectations +0.2%). Tonight, we'll see the Retail Sales report.
 

GBP

AUD/GBP touched 1-month highs of 0.4881 in the early evening before returning to yesterday's opening level at 0.4866. The FTSE closed +0.7%. The Bank of England Monetary Policy Report Hearings were held overnight, with BoE Governor Bailey stating the path for rates will continue to be downwards, although there is much more uncertainty around how quickly interest rates can be reduced. BoE's Taylor stated he wants to see 4-5 cuts over the next year. Tonight, we'll see the Construction PMI. Tomorrow, Retail Sales figures.
 

NZD

AUD/NZD opens flat at 1.1129, touching fresh 5.5-month highs of 1.1152 overnight, only touching this level three other times (briefly) since November 2022. Yesterday, ANZ Commodity Prices showed a +0.7% uptick last month. Kiwi Manufacturing Sales data will be released on Tuesday morning.