Hawkish RBA Commentary Lifts Aussie Dollar

AUD

The Aussie Dollar opens higher against the majors this morning following RBA Deputy Houser’s hawkish commentary yesterday morning which lifted rate hike bets next meeting to over 50%. In yesterday morning’s speech Hauser warned that the inflation outlook was "materially worse" in the coming months, and stated he is willing to see unemployment rise to handle it. Asian equities closed mixed yesterday with the Nikkei +.9%, Hang Seng -.9% and the Shenzhen -1%. Locally, the ASX 200 closed +.15% as communication services and industrials sectors led gains of +2.2% and +1% respectively. Today will see Foreign Direct Investment ytd/y out of China, with no formal expectations, previously reading -5.3%.

USD

AUDUSD sees a marginal gain over the past 24 hours, with the pair stabilising above the 0.70 barrier, opening this morning at a rate of 0.7027 as hawkish RBA commentary gives the pair a boost. Wallstreet finishes the day higher, with both the DOW JONES and S&P 500 closing up 0.6% and the NASDAQ up 1.1%. Crude Oil Inventories came in lower last night, reading -3.1M, expected at -0.1M from -8.6M. Little in the way of meaningful US data yesterday, however tonight will see US Unemployment Claims released, expected to remain mostly flat at 200k from 199k. The main focus now is on the Federal Reserve monetary policy decision next week and also on the release of the Core Personal Consumption Expenditures (PCE) Price Index.

EUR

AUDEUR opens the day higher, with the pair pushing to the top end of the 2 year range, opening this morning at a rate of 0.6254. European equities finish up in the green, with the DAX up +1.3% and the CAC up +1.1%. German Buba President Nagel Spoke last night at the international bankers form, not speaking on any matters relating to interest rate guidance. Looking forward there is no data to be released today, with Friday’s Flash PMI’s being the next piece, expected to remain mostly unchanged.

GBP

AUDGBP opens the day flat, with the pair trading sideways yesterday, opening this morning at a rate of 0.5244. British equities were soft into the close, with the FTSE closing up +0.2%. Last night saw UK CPI y/y rise to 3.5%, expected at 3.4% from 3.1%. This hot print came off the back of surging motor fuels, cementing a hike in the next meeting. BOE Gov Bailey will be speaking this afternoon, with this rising inflation, hawkish commentary could see the GBP lift. Retail Sales m/m and Flash Manufacturing & Services PMI data will be out tomorrow to end the week for the Sterling.

NZD

AUDNZD opens the day higher at a rate of 1.2346. CPI q/q was released this morning, dropping to 0.7%, expected to cool to 0.8% from 1.5%. New Zealand's economic recovery is only in its infancy, yet markets are now pricing an aggressive tightening cycle from the Reserve Bank of New Zealand (RBNZ) over the next year, reflecting the combination of persistent weakness in the New Zealand dollar and the country's standing as a major energy importer, helping to fuel inflationary pressures across the economy. There is no further data for the rest of the week.