Aussie Dollar Retreats as Hawkish Fed Lifts US Dollar

AUD

The Aussie Dollar opens flat against the major currencies and down on the US Dollar, although still remains close to two month highs due to the current risk premium. Asian equities closed higher, with the ASX +0.6%, Shanghai Comp -0.1% and Nikkei +0.4%. Commodities closed lower due to current risk-on attitudes, with the largest movers being Silver -4.6%, Sugar -3.5% and Gold -3.4%. Over the weekend, the Jackson Hole Symposium saw key central bankers in attendance however there was minimal movement in FX rates outside of the AUDUSD. Some minor data out today with MI Inflation Gauge m/m, Company Operating Profits q/q and Private Sector Credit m/m. Across Asia, today will see the release of Chinese Manufacturing PMI data, which is forecasted at 49.5 (prev 49.2) and Non-Manufacturing PMI data which is forecasted to print at 49.5 (prev 49.0). Looking at the week ahead domestically, the main focus will be this Wednesday with the release of our GDP q/q data.

USD

The AUDUSD opens lower at 0.7160, dropping over the weekend due to Kevin Warsh’s hawkish speech at the Jackson Hole Symposium. It was Fed Chairman Warsh’s first major speech as the recently appointed US Federal Reserve’s Chairman this year and his speech hinted that US hikes may be needed to reduce America’s “stubbornly elevated” inflation. On Wall St. the Nasdaq closed -.5%, the S&P 500 -.3%, and the Dow Jones -.1%. Tonight will have US Treasury Secretary Bessent speaking at a press conference on the new sanctions on Iran. Looking at the economic calendar for the US, the key data points will be on Wednesday with ISM Manufacturing PMI data and on Friday with the release of their wage and employment data.

EUR

The AUDEUR opens flat at 0.6182, sitting near 3.5 month highs with no data over the weekend affecting the currency pair. The Eurozone has seen minimal data in August due to the summer holiday slowdown period in Europe. On equities, the DAX closed +0.8% and CAC +1.0%. Tonight will have German Prelim CPI m/m, which is expected to decrease from last month’s reading of +0.8% to +0.3%.

GBP

The AUDGBP opens flat at 0.5290, trading between 0.5271 and two-month highs of 0.5303 over the weekend as markets adjusted interest rate expectations for the Bank of England. No major data over the weekend from England, however Monetary Policy Committee Member Mann spoke at the Jackson Hole Symposium and emphasized the need to manage persistent inflation risks, particularly those driven by supply shocks. No major news out of England until Friday night, with their Bank of England Governor speaking at the London School of Economics TRIUM Anniversary Conference. Today the UK will be observing a Bank Holiday and resume to business as usual tomorrow. 

NZD

The AUDNZD opens slightly higher at 1.2104, touching 4-week highs of 1.2121 over the weekend before settling to current levels. No news or economic data out of New Zealand on Friday or over the weekend, however today will have ANZ Business Confidence at 11am. Key event this week will be on Wednesday when the RBNZ will meet to decide the Official Cash Rate. Markets currently forecast a 25bp hike to bring the rate to 2.75%.