AUD Trades Higher as Hawkish RBA Bets Swell

AUD

The Australian Dollar opens higher against the majors this morning after yesterday’s seasonally adjusted Wage Price Index (WPI) rose by 0.8%. Asian equities closed higher on Wednesday led by the Kospi +2.6%, Shenzhen +1.0% and Nikkei +0.8%. The ASX slid -0.5% as financials weighed on the index, down -4.0%. Commodities closed mixed with Gold -0.1%, Silver -1.1%, Iron Ore -0.5%, and Copper +1.4%. Looking at news for the Aussie, we will have MI Inflation Expectations later this morning at 11am, however that will be the last news release for the week. The next major news release will be on the 21st of May with our Employment Change and Unemployment Rate set to release. 

USD

AUDUSD opens higher this morning at 0.7260 despite U.S. PPI for April rising to +1.4% m/m and +6.0% y/y - much higher than expectations of +0.5% and +4.8% respectively. A stronger session on Wall St. saw the Nasdaq close +1.2%, the S&P 500 +.6%, and the Dow Jones unchanged on the day. Looking at US news the most important event of the week is US President Donald Trump’s visit to China, which is scheduled for 2 days (May 14-15) after his recent arrival. The trip carries important symbolic value, as no US president has gone to China for nearly a decade. That said, expectations of the summit suggest it will fail to produce substantial results which could move the market immediately. The April US retail sales report set to release this evening will provide further insight into consumer health. Both headline and core sales are expected to be moderate at +0.4% m/m, following the previous month’s firm readings. Overnight, the US Senate confirmed Warsh as new Fed Chair in narrowest-ever vote.

EUR

AUDEUR opens higher this morning briefly hitting 2-year highs of 0.6205 before retracing to 0.6195. A range of data released over the European morning with the French Q1 Unemployment Rate at 8.1% compared to expectations of 7.9% while April CIP was confirmed at +1.0% m/m and +2.2% y/y as expected. EU Q1 GDP was +0.1% q/q and +0.8% y/y, again matching expectations. Eurozone equities closed in the green with the DAX +0.8%, and the CAC +0.4%. Nothing set for release out of the Eurozone today with France and Germany both having bank holidays in observance of Ascension Day. The ECB Economic Bulletin will be released tomorrow evening to end the week for Eurozone news.

GBP

AUDGBP opens up this morning reaching 2-year highs at 0.5365 after CB Leading Index m/m, and RICS House Price Balance both missed forecasts. BoE’s Mann advised that a tighter policy stance could trigger volatility as new actors unwind positions, potentially leading to tighter domestic financial conditions than intended. UK equities closed in the green with the FTSE +0.6%. Later this afternoon UK GDP m/m is set for release, which is expected to fall from 0.5% to-0.1%, however Prelim GDP q/q is expected to jump from 0.1% to 0.6%. 

NZD

AUDNZD opens higher and maintains 13-year highs at 1.2228, following this morning’s NZ Visitor Arrivals m/m dropping to -3.0%. Nothing else set for release today from our Kiwi neighbours however tomorrow we will see their BusinessNZ Manufacturing Index, and FPI m/m.