European Interest Rate Hold Boosts AUD
AUD
The Aussie Dollar climbs higher against the majors following Japanese intervention to support the yen, which significantly weakened the US Dollar. Asian equities were soft into the close, with the ASX closing down -0.2% and SHANGHAI COMP closing down -0.1%. Japanese authorities were reported to have intervened in foreign exchange markets to support their currency after it hit its weakest level against the dollar since July 2024. Locally, our Import prices q/q came out lower at 0.1%, expected at 0.4% from 0.9%. China’s April manufacturing PMI showed factory activity expanded, with a reading of 50.3 despite the Middle East conflict. The non-manufacturing PMI contracted though to 49.4, expected at 49.9. Today at 11:30am will see our PPI q/q set to be released, expected to rise to 0.9% from 0.8%. China and Japan will be observing a bank holiday today until Tuesday next week for China and Wednesday next week for Japan.
USD
The AUDUSD opens the day higher, with the pair pushing up against the 0.72 barrier overnight, opening this morning at a rate of 0.7199. Wallstreet was bullish into the close hitting all time highs, with the DOW JONES up +1.6%, S&P 500 up +1% and the NASDAQ up +0.9%. A range of data was released early in the NY session with U.S. Core PCE for March printing at +0.3% MoM and +3.2% YoY as expected. Q1 GDP rose 2.0% though this was short of expectations of 2.3%, up from 0.5%. Unemployment Claims data was firm with initial claims falling to 189k to beat forecasts of 212k. Persistent PCE inflation and a tight labor market will likely force the Fed to delay interest rate cuts, widening interest rate differentials are strengthening the USD as global capital chases higher US yields. The ISM Manufacturing Index for April will be published tonight, with the headline figure forecast to edge down slightly to 52.2. In March, the index advanced to 52.7, marking the third consecutive month above the 50 threshold and signaling expansion in the manufacturing sector.
EUR
The AUDEUR opens the day higher with the pair crushing a monthly high, opening this morning at a rate of 0.6137. European equities were bullish to the close, with the DAX up +1.4% and the CAC up +0.4%. The Main Refinancing Rate was released last night and was as expected, unchanged at 2.15%. By keeping rates steady while acknowledging that energy-driven inflation risks are intensifying, the ECB has signaled a shift toward a more hawkish "wait-and-see" stance that could see the Euro struggle to gain ground if the Fed remains even more aggressive. Core CPI Flash Estimate y/y came out as expected at 2.2%. The Eurozone will have a bank holiday today, so no further data releases this week.
GBP
The AUDGBP sees small gains, with the pair looking to re-take the 0.53 handle, opening this morning at a rate of 0.5293. British Equities closed well into the green yesterday, with the FTSE closing up +1.6%. The Official Bank Rate was released last night, coming out as expected, unchanged at 3.75% with a hawkish 1-0-8 vote hike/hold split as expected. The Press Conference mentioned warnings that Middle East-driven energy shocks make "higher inflation unavoidable" and signaling that while they are currently holding, they are prepared to hike "forcefully" if secondary price pressures take root. BOE Governor Bailey followed up, characterising that the decision was an “active hold”, stating that they cannot ensure there won’t be second round of hikes if energy shocks occur. Tonight will see the Final manufacturing PMI set to be released, expected to read 53.3 from 53.6.
NZD
The AUDNZD opens the day lower, with the pair dropping below the 1.22 handle, opening this morning at a rate of 1.2192. Yesterday ANZ Business Confidence released at -10.6 (prev +32.5).