Aussie Dollar Falls as RBA Hike Bets Fade

AUD

The Aussie Dollar opens lower against the majors this morning as markets digest Tuesday's RBA rate hike to 4.60%, RBA Governor Bullock’s cautious outlook and the weaker than expected inflation data released earlier this week. Asian equities ended stronger yesterday with the Nikkei +3.3%, Hang Seng +0.4% and the Shenzhen +0.3%. Locally the ASX 200 fell -2.0% as energy and consumer staples led losses. Australian Trade Balance data for August released yesterday and remained weak. The Trade Balance report showed that Surplus narrowed sharply to A$495 million in August, compared to a surplus of A$1,351M in the previous reading (revised from A$1,923M). The data signaled that a strong growth in country’s imports shrank the overall trade data. The domestic calendar is looking light today, with focus shifting to Q3 CPI figures and the Rate decision in Novemeber. 

USD

AUDUSD continues its decline to open at a 0.6927 as the Greenback marks its sixth straight session of gains, driven by safe-haven demand and firm US yields after Washington averted a government shutdown. A choppy session for financial markets ultimately saw the Nasdaq, the S&P 500, and the Dow Jones all close +.1% on the day. U.S. 10-year yields closed -5bps at 5.23% (after peaking at 5.33%), while Brent Crude rose 4.6% to $102.50 a barrel. In the U.S., initial jobless claims for the week read 197k against 200k expectations while manufacturing PMIs disappointed at 55.9 (57.0 exp.). The U.S. Employment Report for September will be released tonight. Consensus expects non farm payrolls growth of around +100k, broadly consistent with recent moderation in hiring. 

EUR

AUDEUR opens lower at 0.6161 as the cross remains near multi-month lows as ECB policy keeps the Euro firm against a post-RBA weakened AUD. European equities closed lower with the DAX and CAC coming in at -1.0% and -1.6% respectively. Key focus: Tonight at 7:00 PM AEST, Eurozone Core CPI Flash Estimate y/y inflation data.

GBP

AUDGBP opens in the red at 0.5250 this morning. UK equities closed weaker with the FTSE down -1.7%. UK Final Manufacturing PMI data released yesterday at 51.9 (exp 52.0) from a previous 52.0. The UK economic calendar is quiet today with no major tier-one data releases scheduled.

NZD

AUDNZD ends the week lower at a rate of 1.2363. Some minor data out yesterday for the Kiwi with Building Consents m/m coming in at +5.6% from a previous -4.5%, marking its first increase since June.