AUD Rises as US Fed Comments Trim Hike Bets

AUD

The Aussie Dollar opens slightly up against the majors and sees a moderate increase against the greenback overnight, following a change in tone from a senior Federal Reserve official who said he would support holding interest rates steady if upcoming data showed inflation pressures were easing. Asian equities finished mixed yesterday with the Shenzhen +.1%, Hang Seng -.6% and the Nikkei -.2%. The ASX 200 closed +.5% with financials and healthcare sectors outperforming at +.9% and +.8% respectively. Locally, our Goods Trade Balance data released and showed that the trade surplus narrowed in July, printing at 1.92B (exp 1.52B) from a previous 2.34B. Exports declined by 3.3%, while imports fell by 2.5%, following a 0.7% decrease last month. Chinese business activity data showed encouraging signs as the RatingDog Services PMI rose to 51.4 (exp 50.6) from a previous 50.4. No data expected domestically today and looking ahead the calendar is looking bare next week also.

USD

AUDUSD opens in the green at a rate of 0.7200 after Fed Governor Waller indicated support for keeping rates steady ahead of the September meeting, adopting a wait and see approach based on the results of next Friday's US inflation data. For the September meeting, the chances of a 25 bps rate hike were trimmed from 64% to 54%, while the chances of a hold increased to 46%. Another strong session on Wall St. saw the Nasdaq close +1.4%, the Dow Jones +1.2%, and the S&P 500 +1.1%. US 10-year yields fell slightly to 4.77%, while Brent Crude was steady at $95.50 a barrel. US weekly jobless claims were largely in line with expectations with initial claims at 206k, slightly beating expectations of 205k from a previous 204k. Also released was the ISM Services PMI which improved from 54.1 to 55.4 in August, exceeding forecasts of 54.2. Later tonight, the US employment report for August will be released and is expected to show payroll growth of around +60k, while the Unemployment Rate is forecast to remain steady at 4.1%.

EUR

AUDEUR opens largely flat at 0.6193 and remains at a three-month high. European equities fared well into the close, with the DAX and CAC coming in at +0.6% and +0.1% respectively. Yesterday. the Eurozone Final Services PMI data released at 51.6 from a previous 51.7, showing a slight decline in business activity. Retail Sales m/m will be released later this evening and are currently forecasted to print at +0.3% from a previous -0.3%. The main focus for the Euro now will be next Thursday, when the ECB will have their interest rate decision, although a hike is already priced in by the market. 

GBP

AUDGBP opens slightly higher at a rate of 0.5323, hovering around a three-month high for the pair. UK equities closed strong, with the FTSE up +0.7%. the UK Final Services PMI data also released yesterday at 52.5 from a previous 52.8, although it shows the fastest upturn in UK service sector output since April. All eyes now turn to BOE Gov Bailey, as he is due to speak about the central bank's efforts to control inflation at the London School of Economics later this evening. Looking to next week, UK GDP m/m will be out next Friday.

NZD

AUDNZD saw little movement from yesterday, opening at a rate of 1.2240. The pair has been hovering around a 13 year high for a majority of the year. No data out of New Zealand to end the week, with next week also looking bare on the economic calendar.