AUD Dips Following Fed Chair Warsh Speech

AUD

The Aussie Dollar opens slightly lower against the major currencies, as markets continue to sell off the AUD due to the repricing of future interest rate yields. Asian equities finished mixed yesterday with the Nikkei +0.6%, Hang Seng -0.6% and Shenzhen -0.4%. The ASX 200 traded -0.6% as consumer staples and financials sectors underperformed at -2.1% and -1.7%. Commodities have come down as markets foresee an end to the war in the Middle East, with the largest movers being Natural Gas -2.3%, Iron Ore +2.2% and Crude Oil -2.1%. Yesterday saw the release of Chinese RatingDog Manufacturing PMI's at 51.7 (exp 51.9) and showed the strongest quarter for the sector since the fourth quarter of 2020. With no major local data releases for the Aussie on the horizon, todays Goods Trade Balance release is the next key catalyst with markets watching whether exports, especially iron ore and coal, can continue to support the Aussie.

USD

The AUDUSD opens lower at 0.6893, moving between 0.6865 and 0.6929 this week, as markets lose confidence from poor American economic data. ISM Manufacturing PMIs and Prices fell short of expectations, releasing at 53.5 and 73.0 respectively instead of 53.8 and 77.7. Wall Street dropped overnight, with the Dow Jones +0.0%, S&P500 -0.2% and Nasdaq -0.7%. Tonight will have American employment figures released, with Average Hourly Earnings m/m (exp. 0.3%), Non-Farm Employment Change (exp. 114K) and Unemployment Rate (exp. 4.3%). Markets have been watching the American job markets closely, as they have been sub-par in the past year. Overnight at the ECB central banking forum, Fed Chair Warsh said that inflation risks had come down in recent weeks and that the Fed would chart a new course to make better decisions. 

EUR

The AUDEUR opens flat at 0.6058, as the currency pair traded sideways between 0.6036 and 0.6060 overnight. Last night saw Core CPI Flash Estimate y/y and CPI Flash Estimate y/y release at 2.4% and 2.8% respectively, falling short of expectations of 2.5% and 3.0%. European equities closed mixed yesterday, with the DAX +0.2% and CAC -0.8%. No major data out of the Eurozone until their interest rate decision on 23rd July. At the ECB central banking forum, ECB President Lagarde noted that risks in the EU were more broadly balanced than a few weeks ago.

GBP

The AUDGBP opens lower at 0.5190, nearing 3-month lows of 0.5187 following commentary from Bank of England Governor Bailey who also spoke at the ECB Forum on Central Banking. Bailey mentioned that rate cuts were completely off the table, while a rate hike was not possible due to their softening economy. Stagflation continues to grip the English economy, with the Bank of England flip-flopping between hiking and cutting rates. Tomorrow night will have BoE Governor Bailey speaking again at the Aix-en-Provence Economic Meetings.

NZD

The AUDNZD opens flat at a rate of 1.2145. Building Consents m/m released earlier this morning at -4.0% from a previous +11.1%. Nothing major on the horizon data-wise for New Zealand.