AUD Holds Gains After US Fed Holds Rates Steady
AUD
The Aussie Dollar opens in the green across the majors this morning following yesterdays inflation data. The pace of inflation increased to 3.4% (up from 3.0% last quarter) which is above the Reserve Bank of Australia's target range of 2% to 3%, setting the scene for a likely rate hike when it meets next on February 3rd. Asian equities had a quiet day apart from the Hang Seng which climbed +2.6% to find a 4-year high driven by a broad rally in energy and materials. Locally the ASX 200 fell -0.1% following the strong CPI data for December (+3.8% vs +3.6% exp.) Looking ahead on the economic calendar, no major data to come out for the Aussie until next Tuesday with the Cash Rate decision which will be key in determining whether the AUD can build on recent gains.
USD
AUDUSD opens up at 0.7040 maintaining the 3 year high reached yesterday, trading in a range of 0.6977/0.7041. Early this morning the US Federal Reserve decided to keep rates steady, The decision (which passed with a 10-2 vote) reflects a cautious approach as policymakers assess incoming economic data and constantly evolving risks. Early this morning Donald Trump threatened Iran with a major attack unless its government can make a deal on the future of its nuclear ambitions which could cause some volatility for the dollar. on Wall St all three major equity indices were hovering around flat entering the final hours of trade. U.S. 10-year yields were slightly higher at 4.26%, Gold was trading above $5300, and Brent Crude rose .8% to $68.30 a barrel. Looking ahead for the US, tomorrow we have US Unemployment Claims and Trade Balance, Saturday will see Core PPI m/m.
EUR
AUDEUR opens in the green at 0.5891 which is hovering around 11 month highs following the Aussie Dollar strength and USD weakening. Euro Equities closed in the red with the DAX in at -0.3% and the CAC at -1.1% as gold continues to rally. A quiet day for economic data until tomorrow with a large dump of minor data with the only two to potentially move the needle being German Prelim CPI m/m and German Prelim GDP q/q.
GBP
AUDGBP continues the green streak, opening at 0.5098 which is hovering around a 14-month high. The FTSE also closed in the red at -0.5%. A quiet economic calendar from the UK this week as all eyes are squarely focused on their Interest Rate decision set for next Thursday.
NZD
AUDNZD opens this morning up at 1.1621. Early this morning the New Zealand Trade Balance released which came in at 52m, beating expectations of 30m. Later today the ANZ Business Confidence report is set to release which may provide some insight to the economic sentiment from NZ businesses.