AUD Pauses Amid Looming Unemployment Data
AUD
The Australian Dollar opens mixed against the majors this morning bar the NZD as geopolitical risks kept markets on edge souring risk sentiment. Australia's Q4 wage price index also came in yesterday as expected, rising 3.4% y/y and 0.8% q/q. Looking at Asian equities the Hang Seng and Shenzhen indexes were once again closed as we move through the Lunar New Year holiday, while the Nikkei gained +1%. Locally the ASX 200 finished +0.5% with technology and real estate outperforming at +2.3% and +1.5%. Looking at local news, Australian employment for January will be released today at 11:30am and is expected to have grown by 20k, as labour market conditions are starting to show signs of picking up. The Unemployment rate will also be released at the same time with forecasts suggesting it is likely to remain at 4.1%, although some of the fall in December may have reflected monthly volatility, so the risks may be for it to lift to 4.2%.
USD
The AUDUSD coupling opens lower this morning at 0.7043 after the Greenback strengthened following a flurry of U.S. economic data that was stronger than anticipated, likely driven by an AI investment boom. The Fed meeting minutes was also in the spotlight, showing policymakers were in near-unanimous agreement to keep interest rates on hold, but remained split over the next steps, with "several" of them open to rate hikes if inflation remains elevated, while others were willing to cut rates further if inflation retreats. US equities closed in the green with the Dow Jones +0.3%, S&P 500 +0.7, and the Nasdaq +1%. Overnight we will see the release of US Unemployment Claims which are forecasted to come through lower at 223K from the previous 227K, and we will also get the release for the Philly Fed Manufacturing Index.
EUR
AUDEUR opens basically flat this morning at 0.5976 after what was a quiet day for the Eurozone with no major releases, with only French Final CPI m/m and German 10-y Bond Auction which all came in as per forecast. Eurozone equities closed in the green with the DAX +1.1%, and the CAC +0.8%. Yesterday, European Central Bank (ECB) President Christine Lagarde announced that she planned to step down from her post prematurely ahead of next year's French presidential election, to give outgoing French leader Emmanuel Macron a say in picking her successor. It will be another quiet day data wise out of the Eurozone with a myriad of minor data releases that are not expected to move markets, the next major release will be tomorrow the 20th with Eurozone Flash Manufacturing, and Services PMI’s all set for release in the evening.
GBP
AUDGBP opens slightly lower this morning at 0.5218 after both UK inflation and the cost of living improved in January, with the Consumer Price Index (CPI) rising by 3.0% in the 12 months to January 2026, down from 3.4% in the 12 months to December 2025. On a monthly basis, CPI fell by 0.5% in January 2026, compared with a fall of 0.1% in January 2025. So, the UK got some genuine disinflation for once as the sales season contributed to a decline in the overall price level. UK Equities also closed in the green with the FTSE +1.2%. Nothing major out of the UK today with only CBI Industrial Order Expectations, however tomorrow we will get the release of Retail Sales m/m and UK Flash Manufacturing and Services PMI’S.
NZD
AUDNZD opens higher this morning at 1.1802 after the RBNZ agreed to keep the Official Cash Rate on hold at 2.25% during yesterday’s rate decision. NZD Inflation is expected to be back within the 1-3% target range within the first quarter of 2026. RBNZ’s Breman also stated yesterday during the press conference that there could be a potential interest rate hike by year-end. Breman also spoke this morning stating she was not at all comfortable having inflation at 3.1%, even though January prices data showed slower inflation. No further news from our Kiwi neighbours today, however tomorrow RBNZ Gov Breman is scheduled to speak about monetary policy at the Air Force Museum of New Zealand, with audience questions expected.