AUD Lifted as RBA Hike Bets Increase

AUD

The Aussie Dollar opens higher against the majors this morning after a hotter than expected domestic inflation print. Asian equities ended higher yesterday with the Shenzhen +0.85% and the Nikkei and Hang Seng both up +0.6%. The ASX 200 closed -0.4% as technology and energy sectors shed -3.5% and -1.5%. Australian CPI for July suprised on the upside yesterday with CPI m/m at 1.0% (exp 0.9%), CPI y/y in at 3.5% (exp 3.3%) and the Trimmed Mean CPI m/m (the RBA's preferred measure) printing at 0.5% (exp 0.4%). The results have lifted the odds of a rate hike as futures markets now almost fully price in a 25 bps increase by the end of the year. Today will see some minor releases domestically with Household Spending m/m, Private Capital Expenditure q/q and the RBA Bulletin.

USD

AUDUSD opens in the green at 0.7180, dropping slightly from 0.7188 as the greenback found support from a robust US PCE print which reinforced inflation concerns. Wall Street drifted lower overnight with the Dow -0.2%, Nasdaq -0.1% and the S&P500 flat. US Core PCE for July printed at +0.2% MoM and +3.3% as expected with the Q2 number revised up to 3.6% from 3.4%. Personal Income rose 0.4% and Personal Spending rose 0.2%, beating expectations of +0.2% and +0.1% respectively, while Durable Goods Orders printed at +1.1%, beating expectations of +0.5%. Also released was Q2 GDP which came in steady at 1.5% as expected. Later this evening will see the release of US Unemployment Claims and Goods Trade Balance data.

EUR

AUDEUR opens up at rate of 0.6157 off the back of increased rate hike bets for the Aussie Dollar. European equity markets closed sightly up with the DAX and CAC coming in at +0.1% and +0.3% respectively. Another quiet day data wise for the eurozone and today will be more of the same with just some minor data expected which will do little to move markets. The next focus for the Euro will be next Tuesday with the release of their PMI and CPI inflation data. 

GBP

AUDGBP opens the day higher at a rate of 0.5278, which marks a two month high for the pair. UK equities closed slightly lower with the FTSE -0.1%. Yesterday, CBI Realized Sales came in at -48 (exp -35) from a previous -26, as retail activity slumps in the month of August with sharply falling sales volumes. No major data releases expected for the UK for the rest of the week.

NZD

AUDNZD opens in the green at 1.2069 this morning, reclaiming the 1.2 handle. No major releases to close the week for New Zealand as the focus shifts to next Wednesday's RBNZ meeting with a 25 basis point hike heavily priced in by markets.