Aussie Dollar Stagnant as RBA Decision Looms
AUD
The Aussie Dollar opens virtually flat across the board this morning as markets anticipate tomorrow's critical RBA interest rate decision, with a 25 bps rate hike already priced in by the market. Asian equities finished mixed on Friday, with Japan's Nikkei gaining +1.3% while the Shenzhen Composite fell -1.7% and the Hang Seng dropped -1.0%. Locally, the ASX 200 fell -0.4%, dragged lower by sharp declines in technology (-1.6%) and consumer discretionary (-1.4%). Local data is clear today, with all market attention locked on tomorrows RBA rate decision, followed by Governor Bullock's press conference at 3:30 PM AEST. Traders will focus on whether the RBA signals further rate increases or adopts a "one and done" stance. Across Asia, today will see the release of Japan's Monetary Policy Meeting Minutes following their rate increase earlier this month.
USD
AUD/USD opens flat at 0.7012 as the US Dollar Index holds near multi-month highs. The Greenback remains supported by elevated US 10-year Treasury yields (~5.16%), underpinned by expectations that the Federal Reserve will keep interest rates higher for longer (~70% market odds of an October hike). A firm end to the week on Wall St. saw the Dow Jones close +0.9%, while both the S&P 500 and the Nasdaq closed +0.5%. Looking at the week ahead for the US economic calendar, this week include Conference Board Consumer Confidence and JOLTS job openings on Tuesday night, Core PCE inflation and final Q2 GDP on Wednesday night, and Friday's Unemployment and Non-Farm Payrolls report.
EUR
AUD/EUR opens flat at 0.6162 this morning. Price action in the cross remains subdued following a quiet weekend for European economic news. The pair continues to be driven by policy divergence, with the European Central Bank holding its policy rate steady at 2.50% while the RBA prepares to raise rates. European equity markets closed mixed, with Germany’s DAX closing up +0.6% while France’s CAC ended flat at 0.0%. Later today, ECB President Christine Lagarde is due to testify before the Committee on Economic and Monetary Affairs of the European Parliament. Important regional data follows later in the week, including German Retail Sales and preliminary CPI on Wednesday, leading into Eurozone flash HICP inflation on Friday.
GBP
AUD/GBP opens effectively flat, holding steady near the 0.5301 level. The cross is trading sideways in a tight range amidst a lack of major UK headlines over the weekend. Traders are staying sidelined ahead of tomorrow's Australian rate announcement for the next clear direction. UK equities edged slightly higher on Friday, with the FTSE 100 closing up +0.1%. The UK economic calendar is light today with the only point of interest being MPC Member Ramsden who is due to speak in London later this evening. Key updates later in the week include the final Q2 UK GDP figures and the FPC Meeting Minutes on Wednesday and scheduled comments from Bank of England Governor Andrew Bailey on Thursday evening.
NZD
AUD/NZD opens flat at 1.2405, maintaining its position near 52-week highs. The Aussie continues to command a strong premium over the Kiwi dollar due to central bank policy divergence. With no tier-one economic releases scheduled in New Zealand this week, AUD/NZD will take its cues entirely from broader risk appetite and the fallout from Tuesday's RBA rate decision.