AUD Lower As Risk Sentiment Sours
AUD
The AUD starts the week heavily on the back foot, losing significant ground across most major currency pairs. Coronavirus has played a significant role in recent risk-off sentiment for markets as Sydney and Melbourne report their recent outbreaks. Massive floods in Europe as well affecting risk sentiment. Local equities were mixed, the ASX had minor gains of 0.2%, Shanghai Comp down 0.7% and the Nikkei was down 1%. Local equities should open lower this morning as well after losses in the US on Friday. Commodities also failed to support the AUD over the weekend as Gold, and Iron Ore were down, Silver was down the most at -2.6%. Little in the way of economic data this week, even tomorrow’s RBA meeting minutes are probably already irrelevant given how fast the economic situation in AUS has changed with the recent delta outbreak which has crippled about 55% of Australia's total economic output. An AUD rebound looks unlikely in the short-medium term, so plenty of opportunity for exporters.
USD
The AUDUSD pair fell to fresh 2021 lows of 0.7391, the pair currently trades at a rate of 0.7393 at the time of writing. Renewed demand for the Greenback alongside recent falling equities led the way at the end of the week, both the S&P500 and Nasdaq were down 0.8% and the Dow Jones was down 0.9%. US yields were flat despite the ongoing inflation concerns while oil finished the session relatively flat to finish the week at $71.80 a barrel. It’s a quiet week ahead on the economic calendar apart from tomorrow's RBA meeting minutes and US unemployment claims on Thursday evening. USD is looking like a solid bet with faltering risk sentiment around the globe.
EUR
The AUDEUR pair remains under pressure as we sit at new 10-day lows, currently trading at a rate of 0.6258. European Equities were down, CAC was down 0.5% and the DAX was down 0.6%. No data on the docket this evening with investors eyeing off next week’s ECB meeting. ECB sources on Friday were quoted as saying that ECB policymakers were spilt about changes to the language on monetary stimulus in draft documents prepared for next week’s ECB meeting. The main event risk for the EUR in the week ahead will be the ECB’s latest policy meeting.
GBP
The AUDGBP pair bucked the trend to post a gain over the weekend, coming in to trade at a rate of 0.5370 at the time of writing. From 9am this morning the UK exits their lockdowns and enters ‘Freedom Day’. News over the weekend reported the UK PM Boris Johnson’s weekend comments suggesting the need for cautious as the nation approaches the “Freedom Day”. PM Johnson’s video message published Sunday said, “If we don’t do it now, we’ve got to ask ourselves, when will we ever do it?” "This is the right moment but we’ve got to do it cautiously”, added Johnson. More than 54,000 new infections were confirmed on Saturday, the highest daily total since January. Hospitalizations and deaths are also rising, but remain far lower than at previous infection peaks thanks to vaccination. There's a feeling that the UK is about to undergo one of the biggest social experiments in human history and the results are being watched closely around the globe. More than two-thirds of British adults have had both shots of a vaccine. MPC Member Haskel speaks this evening with no other noteworthy mentions.
NZD
The AUDNZD pair fell to fresh 5-month lows of 1.05472 before coming in to trade at a rate of 1.05619 at the time of writing. The Kiwi pair had significant volatility last week as markets digested the recent RBNZ decision to end QE (Quantitative Easing) on this coming Friday. Markets are now expecting indications that rates will rise across the ditch at some point this year, especially after the strong CPI data at the end of last week. The NZD will probably look to extend gains against AUD in the short term with the diverging health conditions in both countries. No-noteworthy mentions for data this week as we await the RBA meeting minutes tomorrow.