Middle East Strikes Overshadow RBA Rate Decision

AUD

The AUD opens lower against the major currencies, hovering at two-week lows as risk sentiment soured overnight due to new military developments in the Middle East. This overshadowed the RBA’s interest rate hike of 25 basis points, which was widely expected by markets before the decision. RBA Governor Bullock mentioned that they were “uncertain about the next rate move” and was withholding guidance on future rate moves. On equities, the ASX closed +0.3%, Shanghai Comp -0.8% and Nikkei -0.3%. The next data piece out of Australia today will be Household Spending m/m (exp. +0.2%), which the RBA uses as a measure for economic activity.
 

USD

The AUDUSD opens lower at 0.6965, as the USD strengthened from risk-off attitudes in the market due to new missile strikes in the Strait of Hormuz. Wall Street closed mixed yesterday, with the Dow Jones -0.4%, S&P500 +0.4% and NASDAQ +0.6%. Yesterday, JOLTS Job Openings released at 7.52M (vs. exp 7.16M) which hinted at a job market recovery in the US. Today, the US Midterm Elections will be conducted. The current expectations are that the Democrats will take control over the House of Representatives, while the Senate is seen as a toss-up. Tonight will have ISM Services PMI, which is expected to print at 55.0.
 

EUR

The AUDEUR opens lower at 0.6255, touching two week lows of 0.6221 as markets adopted risk-off attitudes. European equities closed lower as well, with the DAX -0.4% and CAC -0.3%. Last night, the French Government’s Budget Balance released at -159.2B Euros which further fuelled concerns over France’s debt crisis. Tonight will have Core CPI and CPI Flash Estimates y/y, with Core CPI and CPI expected to release at 2.5% and 4.0% respectively.
 

GBP

The AUDGBP opens lower at 0.5195, touching two week lows of 0.5191 as the AUD was sold off due to a rotation towards less risky assets. UK equities also closed lower, with the FTSE -1.1%. No major economic data events out of the UK yesterday and today, with the next data piece being the Bank of England’s interest rate decision on Thursday night. The Bank of England is expected to increase its official bank rate to 4%, with a vote of seven members to hike and two members to hold.
 

NZD

The AUDNZD opens at 1.2473, rising from last night’s weekly lows of 1.2394 due to softer than expected employment data from New Zealand. Their Employment Change q/q (-0.1% vs. exp. +0.4%) and Unemployment Rate (5.7% vs exp. 5.5%) printed this morning, with their Unemployment rate at the highest in 11 years. The next key date is November 7, with their general election.