Aussie Dollar Lifted as Fed Hike Bets Cool

AUD

The Aussie Dollar opens mixed against the majors this morning after what was an uneventful day in local news. However a flurry of Chinese data was released with 2Q GDP growing 4.3% y/y, June Retail Sales rising 1% y/y and China Jan-June Fixed Investment falling 5.7% y/y. Asian equities ended mixed yesterday with the Nikkei +1.5%, Hang Seng +1.4% and the Shenzhen -0.2%. Locally the ASX 200 closed +0.4% as materials and utilities sectors outperformed. It will be another quiet day locally with only MI Inflation Expectations to be released later this morning capping off the week for local data. The next major data point ahead for the Aussie will be next Thursday with the release of our employment data.

USD

AUDUSD opens higher this morning at 0.7006 to reach a 3-week high after U.S. PPI for June came in well below estimates at -0.3% m/m (0% forecasted), and +5.5% y/y (+6.2% forecasted) confirming declining inflation in June. On Wall St. the Nasdaq closed +0.6%, the S&P 500 +0.3%, and the Dow Jones +0.3%. U.S. 10-year yields fell 4bps to 4.55%, while Brent Crude rose 1.4% to $85.90 a barrel. The US retail sales report for June is scheduled for release tonight and will provide an update on the health of the consumer. Headline sales are expected to slow to +0.3% m/m for the month. In May, both headline and core sales posted solid gains, with the former partially reflecting higher oil prices. Unemployment claims will also be released later this evening with claims expected to increase slightly from 215K to 216K. Tomorrow morning President Trump is due to speak at the White House on the topic of elections but may also discuss the ongoing conflict in Iran.

EUR

AUDEUR opens slightly higher this morning at 0.6109 after an uneventful day out of the Eurozone with only some minor releases. Industrial Production m/m came through much lower than forecasts of 0.3% at -0.2%. European equities closed mixed with the DAX -0.6% and the CAC +0.2%. It will be another quiet day for the Eurozone with no major data to note, however later this evening we will get the Italian, and Euro Trade Balance which are both expected to come through higher than previous. 

GBP

AUDGBP opens lower this morning at 0.5175 after speculation that the new Finance Minister appointed by the new Prime Minister would bring in a much stricter monetary policy. UK equities closed in the red with the FTSE -0.1%. There will be a myriad of UK releases today with their Goods Trade Balance, Construction, Industrial and Manufacturing Production m/m. However the main focus will be on their GDP m/m release expected to increase from -0.1% to 0%. 

NZD

AUDNZD opens lower this morning at 1.1981 as the NZD extends its gains on increased wagers for rate hikes, with markets implying around an 80% chance of an increase at the next RBNZ meeting in September, and rates of at least 3.0% by year-end. Some minor data expected to release tomorrow with FPI m/m.