Rate-Cut Odds Surge Following Soft US Jobs Report
AUD
The Aussie Dollar opens the week up against the US and flat against the major currencies off the back of an underwhelming U.S. employment report for August. Non-farm payrolls grew by just 22k (expectations were 75k) in August, representing the fourth consecutive soft report. A strong day for Asian equities saw the Shenzhen trade +2.2%, Hang Seng +1.4% and Nikkei +1%. Locally, the ASX 200 ended +0.5%, with real state and consumer discretionary sectors climbing +1.4% and +1.3%. Locally, a quiet end and start to the week with Westpac Consumer Sentiment and NAB Business Confidence out tomorrow. Asia, New Loans tentative out of China Tuesday and CPI and PPI Wednesday morning.
USD
AUD/USD opens stronger at 0.6549, touching 6-week highs of 0.6588 over the weekend, off the back of an underwhelming U.S. August employment report which has seen increased calls for an interest rate cut from the Federal Reserve next Thursday. 22k jobs were added (short of 75k expectations), the Unemployment Rate rose to 4.3% and Average Hourly Earnings sat at 3.7% year-on-year (down from 3.9% y/y last month). Also, some modest downward adjustments to job growth in July and June pushed the three-month moving average on payroll growth down to a mere 29K. In addition to concerns over the sliding jobs market, the average U.S. consumer has faced squeezed spending power from the tariff war. Sentiment took a hit off teh back of the jobs report with the Dow Jones -0.5%, the S&P 500 -0.3%, and the Nasdaq unchanged. No US data out to start the week. Wednesday, we see Core PPI m/m and PPI m/m, both previously at 0.9% expected at 0.3% respectively. Thursday will bring the CPI report.
EUR
AUD/EUR opens the week flat at 0.5593. No data from either currency has seen it trade relatively flat over the weekend. Eurozone equities closed weaker with the DAX -0.7%, while the CAC -0.3%. Minor data scheduled for today, German Industrial Production m/m, German Trade Balance and Sentix Investor Confidence set to be released from 4-6pm today. This Thursday, the European Central Bank Main Refinancing Rate is forecasted to hold at 2.15% with the ECB’ stance remaining firmly on holding rates.
GBP
AUD/GBP opens flat to start the week at 0.4855, despite stronger UK Retail Sales data coming in +0.6%, expected at 0.3% growth. UK equities closed in the red with the FTSE down -0.1%. The GBP follows with little currency impacting data to open the week. Their main data piece for the week is set for Friday, GDP m/m expected flat, previously 0.4%.
NZD
AUD/NZD opens slightly weaker at 1.1126, no data to start the week. Tomorrow, we have Manufacturing Sales q/q. This week’s noteworthy data out on Thursday RBNZ Gov Hawkesby is due to speak at 9:15am.