The Australian dollar was a mover during the session here today. AUD/USD tested higher in the Sydney morning, ahead of wages data due at 11.30am Sydney time. The Wage Price Index data for Q1 of this year came in below central expectations on both q/q and y/y (see bullets above). AUD/USD dropped in response, albeit not within a very large range. Expectations of a 40bp rate hike from the Reserve Bank of Australia at the June (7 th ) meeting were trimmed in response to the data.

USD/JPY has also been a mover, down from highs just over 129.50 to be lows circa 129.10. Lower AUD/USD and lower USD/JPY of course translates into a heavy AUD/JPY. Other yen crosses dropped also.

EUR, GBP, NZD, CAD had all gained a little against the USD early in the session and all have given back this, to a greater or lesser extent. USD/CAD is up 30+ points from its early lows under 1.2800.

WTI popped above $114 but is back under as I update

Apart from the Australian data we had the preliminary reading for Japanese economic growth in the first quarter (January-March) of 2022. GDP contracted (see bullets above). We also had data on Chinese house prices in April. These fell m/m for the first time since December 2021 and recorded their slowest y/y gain since October 2015.

On the central bank front had extended remarks from Charles Evans, President of the Chicago Federal Reserve branch. Evans did not depart from the current Fed chorus warning of rapid rises for Fed Funds in the near term, and that the Fed would do more if needed. He did express his expectation, though, that he sees a return to 25bp hikes from July or September.

The People’s Bank of China raised the CNY at the daily USD/CNY reference rate setting. CNY was moved higher by 440+ pips to 6.7421 against the USD. This is the third consecutive day for a higher CNY against the USD at the central rate setting.

AUD drop on the wages data - arrow

aud wpi wrap 18 May 2022