A$ Underperforms EU FX Rally, Survey Data On Tap Tomorrow

Outside of an early dip towards 0.6800, AUD/USD has tracked tight ranges, not getting much beyond 0.6825/0.6850 (last 0.6835/40). The A$ has slightly underperformed within the G10 FX space (outside of the yen). The EU currencies have outperformed today.

• Cross asset signals have been supportive from an equity standpoint, although US futures are back to flat, giving back earlier gains.
• AU yields have caught up to some degree, but the AU-US 2yr spread remains close to recent wides at -58bps.
• Iron ore and copper are both down from recent highs, but with China/HK out today it's difficult to read too much into the moves.
• Tomorrow the domestic data calendar swings back into gear. The CBA’s measure of household spending for August will be published. Last month it rose 1.1% m/m and 12.2% y/y, showing consumer resilience in the face of cost-of-living pressures and higher interest rates.
• Tuesday also sees the Westpac consumer confidence index for September. In August, it fell to its lowest since the Covid-impacted August 2020 reading. On the business side, NAB releases its business conditions survey for August also tomorrow. So far, conditions and confidence have been holding up well and this survey is likely to be scrutinised not just for signs of a slowing economy but also for what it says about labour costs and prices.