Aussie Dollar Eases Ahead of US CPI Test
AUD
The Aussie Dollar takes a hit against the majors, with rising oil and energy prices creating inflation concerns, lifting chances of future hikes globally. Asian equities were mixed in trade yesterday with the Nikkei +.2%, Hang Seng -1.3% and Shenzhen at -.5%. Locally the ASX 200 closed -.1%, as technology and materials underperformed at -1.7% and -1.6%. Yesterday saw the release of MI Inflation Expectations, which came in unchanged at 4.9%. There is no further data out for the rest of the week, with a local dry-spell of data until next Friday, with RBA Gov Bullock speaking on Friday.
USD
The AUDUSD dropped overnight, losing the 0.72 handle, opening this morning at a rate of 0.7159. On Wall St. the Nasdaq closed -.7%, while both the S&P 500 and the Dow Jones both closed -.6%. U.S. PPI for August printed at +.4% MoM as expected with the YoY result at +5.4%, higher than expectations of +5.3% with core measures basically in line with expectations. Also released was weekly jobless claims, which were also generally in line with expectations with initial claims at 206K (205k exp) and continuing claims at 1.771 mio (1.780 mio exp). U.S. CPI for August will be released tonight and will likely shape expectations for the FOMC’s September 16th meeting. In July, headline inflation decelerated to +3.4 y/y, with gasoline providing relief. Core inflation also slowed down, resting at 2.5% y/y, with this primarily driven by core services.
EUR
The AUDEUR opens down at 0.6167, falling 0.8% from this week’s highs of 0.6218 as risk-off attitudes entered the market due to global inflation risks. The European Central Bank (ECB) raised interest rates last night by 25 basis points, with ECB President Legarde stating that raising interest rates were a “no-brainer” due to the Middle-East energy inflation. Currently, no further interest rate hikes are expected this year from the ECB. On equities, the DAX closed -0.8% and CAC -0.5%. Tonight, ECB President Legarde will speak at Banque Populaire Caisse d’Epargne Group Executive Summer University.
GBP
The AUD/GBP opens lower this morning at 0.5297 tinkering just below the 0.5300 handle. British equities followed the broader global downturn, London's FTSE 100 closed the session -0.6% lower. Today, the focus is firmly on the UK monthly GDP release, which is expected to show flat growth at 0.0%, setting the stage for next week's highly anticipated Bank of England rate decision.
NZD
AUDNZD saw a slight dip overnight to open at a rate of 1.2338. Earlier this morning the BusinessNZ Manufacturing Index survey released at 53.1 from a previous 54.3, showing a softening in manufacturing for August. Looking ahead to next week, the main focus point comes on Thursday with the release of the quarterly GDP figures for New Zealand.