AUD Finds a Pulse
AUD
The AUD had a mixed session of trade, remaining relatively subdued across most major currency pairs, USD excluded (see below). Local Equities fell sharply into Monday trade following the Friday US Equity sell-off, the ASX fell -1.8% to a three-week low at 7235.3, Nikkei was down -3.3% and Shanghai Comp posted modest gains of +0.1%. Commodities were subdued, Iron Ore and Copper were the only notable gains, both up 0.5%, and Crude Oil was up 2.3% at $73.50 a barrel. No-noteworthy data on the calendar today with Aussie Flash Manufacturing & Services PMI due tomorrow in addition to RBA Gov Ellis speaking.
USD
The AUDUSD pair slightly bounced back from 6-month lows overnight, coming in to trade at a rate of 0.7542 at the time of writing. US Treasury Yields were 4Bps higher and returning 1.485%, prompting extended support to the risk-sensitive Aussie. A general improvement in risk sentiment also helped US equities reverse their recent losses, giving the AUD an assist. Dow Jones the biggest gain of 1.8%, S&P up 1.4% while the Nasdaq was up 0.8%. A quieter day is expected in the US although attention will soon shift to US Fed Chair Powell’s congressional Testimony due at 4am tomorrow morning. His testimony is in regard to the economy and Covid-19, with expectations that Powell’s messaging to be consistent with the recent conference last week regarding inflation and tapering.
EUR
The AUDEUR pair remaining relatively subdued in the overnight session, the pair is currently trading at a rate of 0.6327 at the time of writing. European Equities were up, DAX up 1.0% while the CAC was up a modest 0.5%. This morning ECB’s President Lagarde told European Lawmakers “The pandemic still weighs on the euro zone economy but growth could still rebound quicker than now expected as consumers begin spending again”. Lagarde added that “it was not yet time to allow interest rates to rise, so the ECB would maintain favourable financing conditions”. To the data, no-noteworthy mentions this morning with the Eurozone due for Flash Manufacturing and Services PMI tomorrow.
GBP
The AUDGBP pair traded at a loss overnight, the pair trading at 0.5412 at the time of writing which represents close to 8-month lows. Brexit Deadlock and a spike in the UK’s cases of the concerning delta variant have been weighing on the UK’s economic outlook. The Delta variant keeps troubling the UK policymakers even if they’re optimistic over the economic trajectory and have already announced a one-month delay to the unlock from the original June 21 deadline. The +10,000 Covid infections for the third day and 79% rise in Delta strain cases push the UK’s scientists to predict a third wave of the virus. There is no-noteworthy data on the docket this evening. Traders awaiting this week’s BOE meeting on Thursday night.
NZD
The AUDNZD pair trading at a rate of 1.07874, 8 pips down from yesterday's open. Both antipodeans trading within range of the other following the recent weaker US treasury yields and change in risk sentiment. Friday morning's Trade Balance figures are the only piece of macro data for the week ahead.