Trump Tariff Threats Weigh on Asian Risk Appetite

AUD

The Aussie opens down across the majors this morning on the combination of fresh tariff threats against the EU and the shrugging off of the latest administrations attempt to influence Fed policy. Asian equities ended the week lower, the Hang Seng trading -0.5%, Shenzhen -0.4% and Nikkei -0.3%. Locally the ASX 200 gained +0.5% as technology and real estate sectors outperformed at +1.2% and +1.1% respectively. Looking at the economic calendar for the week the main focus for the Aussie will be on Thursday with the Unemployment Rate and Employment Change data set to be released. The market will also be watching the release of key Chinese economic data later today to see whether the economy is still slowing and whether the economy hit its 5 per cent growth target for the year.

USD

AUDUSD opens in the red at 0.6672 following President Donald Trumps comments on economic adviser Kevin Hassett, prompting speculation he is less likely to be named as chair of the Federal Reserve as it it underscores that the Fed decision is mostly about political credibility. Hassett is seen as the least independent, which in turn is the most-dovish due to Trump's longstanding desire to cut rates. A quieter session ahead of the MLK day holiday saw Wall St. trade slightly lower with the S&P 500 closing -0.2%, while the Nasdaq and the Dow Jones both closed -0.1%.  U.S. 10-year yields rose 6bps to 4.27%, while Brent Crude rose slightly to $64.40 a barrel. The economic calendar for the US is a quiet one, as the only major data releases will be on Friday with the Core PCE Price Index m/m and Final GDP q/q.

EUR

AUDEUR opens flat at 0.5761 as the US vows to implement tariffs on European allies until the United States is allowed to buy Greenland. European equities closed in the red with the DAX at -0.2% and the CAC at -0.7%. Later this evening we have the Eurozone Final Core CPI y/y which is forecasted at 2.3%. The main focus this week will be on Friday with a series of major Manufacturing and Services PMI data to be released.

GBP

AUDGBP opens down at 0.4995, losing its 0.5 handle over the weekend. The FTSE closed flat at 0.0% also.  It is an important week for UK data with labour data announced tomorrow and CPI y/y on Wednesday. Currently Currently UK CPI is among the highest in the G10 countries at 3.2% in November, while the 5.1% unemployment rate (October) was the fifth highest.

NZD

AUDNZD opens down at 1.1622 as the Kiwi shows some signs of life. Tomorrow we have the BusinessNZ Services Index
which is unlikely to move the needle too much. The rest of the week we have GDT Price Index on Wednesday and the major piece of data to watch for on Friday with the CPI q/q.