S&P 500 — US Large Cap Index
FTSE 100 — UK Blue Chips
Euro Stoxx 50 — Eurozone Leaders
DAX 40 — German Equities
CAC 40 — French Market Index
Nikkei 225 — Japan Benchmark
Hang Seng — Hong Kong Index
Shanghai Composite — China Mainland
ASX 200 — Australian Market
TSX Composite — Canada Index
Nifty 50 — India Large Cap
STI Index — Singapore Market
KOSPI — South Korea Index
Bovespa — Brazil Equities
JSE Top 40 — South Africa Index
IPC Index — Mexico Market
- AUD/NZD scales higher for the fourth straight day, though it lacks follow-through buying.
- The reaction to China’s PMIs was muted ahead of this week’s key data/central bank event.
- Australia’s Q2 GDP report and the crucial RBNZ rate decision are due on Wednesday.
The AUD/NZD cross turns positive for the fourth straight day following an intraday fall to the 1.2065 area and climbs to a fresh high since July 9 during the Asian session on Monday. Spot prices, however, struggle to build on the momentum and currently trade just above the 1.2100 mark as traders seem hesitant ahead of this week’s key data and the central bank event risk.
Australia’s June-quarter Gross Domestic Product (GDP) report is scheduled for release on Wednesday and will be immediately followed by the Reserve Bank of New Zealand’s (RBNZ) monetary policy decision. In the meantime, the NZIER Monetary Policy Shadow Board result suggested that the RBNZ will increase the OCR by 25 basis points (bps) in September. Moreover, traders expect the central bank to signal a further hike by the year-end, which is seen as acting as a tailwind for the New Zealand Dollar (NZD) and capping the AUD/NZD pair.
The Australian Dollar (AUD), on the other hand, continues to draw support from the Reserve Bank of Australia’s (RBA) hawkish outlook. In fact, RBA Governor Michele Bullock emphasized during her press conference that a rate cut is not on the agenda and that additional tightening remains “quite possible” if inflation fails to cool as projected. The view was echoed in minutes from the August RBA meeting, released last Tuesday, which, along with China’s better-than-expected PMIs, offers some support to the China-proxy Aussie and the AUD/NZD cross.
China’s National Bureau of Statistics (NBS) reported Manufacturing PMI rose to 49.8 in August, compared to 49.2 in the previous reading and above consensus estimates for a reading of 49.7. Additionally, the NBS Non-Manufacturing PMI held steady at 49.0 during the reported month. The gauges, however, remain below the 50 line separating growth from contraction, which holds back AUD bulls from placing aggressive bets and keeps a lid on the AUD/NZD cross. This warrants caution before positioning for an extension of a one-week-old uptrend.
