AUD Steady Ahead of Jobs Data and Trump-XI Summit
AUD
The Aussie Dollar begins the week slightly up against the majors after the RBA maintained its hawkish stance last Friday. RBA Governor Michele Bullock said during a testimony before a parliamentary committee that inflation remains “too high” due to tensions in the Middle East. Asian equities finished higher on Friday with the Nikkei +1.4%, Shenzhen +1.1% and the Hang Seng +.6%. Locally the ASX 200 ended unchanged on the day. Across Asia, the Bank of Japan raised its interest rate by 25bps to 1.25% in a 7-2 vote, with board members Asada and Sato voting against the rate hike. Japan will also be observing a Bank Holiday from today until Wednesday. Looking at the week ahead on the domestic economic calendar, tomorrow will see RBA Gov Bullock participate in a fireside chat in Sydney, while the main event comes on Thursday with the release of our monthly employment data.
USD
AUDUSD opens slightly up at a rate of 0.7124 as hike odds increase for both the RBA and the US Fed, the pair is therefore caught between two hawkish monetary policy outlooks. A mixed session to end last week on Wall St. saw the Nasdaq close +.4%, the S&P 500 +.2%, and the Dow Jones -.2%. U.S. 10-year yields rose 7bps to 5%, while Brent Crude fell 2.5% to $104.8 a barrel. U.S. Industrial production for August was flat MoM, lower than forecast of +0.3% while Capacity Utilisation was 76.3%, again lower than forecasts of 76.4%. The economic calendar is looking light for the US this week with several FOMC participants due to be making public remarks and Manufacturing and Services PMI data out on Wednesday evening. The main event for the US this week will come this Thursday when US President Trump and Chinese President Xi will meet in Washington.
EUR
AUDEUR opens flat this morning at 0.6204 following ECB President Lagarde's comments over the weekend. European equities closed in the red with the DAX and CAC coming in at -1.6% and -1.5% respectively. At a press conference at the informal ECOFIN meetings in Dublin, Lagarde noted that the central bank will be handling issues on a meeting by meeting basis and that they are well positioned to respond to energy volatility. Lagarde is set to speak again early tomorrow morning at the ECB roundtable on Pontes launch, in Frankfurt.
GBP
AUDGBP comes in flat this morning at a rate of 0.5319. UK equities also closed in the red, with the FTSE down -1.5%. On Friday, UK Retail Sales m/m data came in above expectations to print at +0.5% (exp -0.2%) from a previous -0.5%. The week ahead is looking fairly quiet for the UK, with some PMI data out Wednesday and BOE Gov Bailey set to speak on Friday.
NZD
AUDNZD continues to rise, coming in this morning at a rate of 1.2445. Some minor data out later this afternoon for New Zealand with Credit Card Spending y/y set to release. A quiet week ahead expected for the Kiwi with no major releases on the horizon.