AUD Dips as Soft Inflation Data Unwinds RBA Hike Bets

AUD

The Aussie Dollar opens lower against the major currencies following a softer than expected CPI print yesterday morning which lowered expectations of an interest rate hike. In August, headline CPI rose 0.4% (consensus: 0.5%) to be up 4.0% y/y, while trimmed mean CPI increased 0.2% m/m (consensus: 0.3%) to remain at 3.6% y/y for a third straight month. Asian equities closed higher yesterday with the Nikkei +1.9%, Hang Seng +0.4% and the ASX 200 +0.9%. Today, some minor economic data being released out of Australia with the RBA Financial Stability Review, Goods Trade Balance and Commodity Prices y/y. China will also be observing five consecutive bank holidays starting from today.

USD

AUDUSD opens at 0.6947, falling to 2-month lows as the Greenback continues to strengthen following the release of some mixed economic data overnight. A mixed session to end the quarter for U.S. equities saw the Nasdaq close +0.8%, the S&P 500 +0.3%, and the Dow Jones -0.5%. U.S. 10-year yields rose 5bps to 5.28%, while Brent Crude rose 1% to $103.50 a barrel. A raft of U.S. data was released overnight with Aug. Core PCE at +0.2% MoM (est. +0.3%), Sept. ADP Employment Change +90k (+75k est.), and Aug Personal Income coming in at +0.2% MoM (+0.5% est.). This evening the U.S. ISM Manufacturing Index for September will be published, currently forecasted at 54.8 from a previous 54.6. 

EUR

AUDEUR opens lower this morning at a rate of 0.6130, falling to a monthly low overnight. European equities finished up in the red, with the DAX down -0.8% and the CAC down -0.9%. Yesterday saw German Prelim CPI print at 0.6% (exp 0.2%) from a previous 0.5%. Today will see a slew of Manufacturing PMI’s to be released, with the Final manufacturing PMI expected to remain at 52.7. ECB President Lagarde will be speaking again tonight, she is set to deliver opening remarks at the European Systemic Risk Board Annual Conference. Traders will be keeping an ear out to hear any hints on ECB rate guidance. 

GBP

AUDGBP opens lower this morning near 0.5235, as the cross continues to be weighed down by central bank policy divergence, as the RBA flags a potential pause in its tightening cycle while the Bank of England maintains a more cautious, restrictive stance. UK equities saw a dip overnight, with the FTSE 100 closing down -0.3%. On the calendar today, BOE Gov Bailey is set to deliver opening remarks at the Bank of England Future of Money Conference and the UK's Final Manufacturing PMI data is set to release.

NZD

AUDNZD opens in the red at a rate of 1.2330 to reach a two week low. ANZ Business Confidence released yesterday morning at 51.9 from a previous 53.7. Earlier this morning, Building Consents m/m came in at 5.6% (prev -4.5%) and marked its first positive result since June this year.