Equities Drop From Overvaluation Concerns
AUD
The Aussie Dollar opens the morning down, weakened by dovish commentary from the RBA, stating that another cut may still be on the table. The Reserve Bank of Australia held the cash rate at 3.60% yesterday as expected, but it took a dovish view compared to last week’s upside inflation surprise. Asian Equities fell, with the ASX closed down 0.9% and SHANGHAI COMP closed down 0.4%. Commodities were down, with Oil down 0.9%, Gas up 3.4%, Gold down 0.3%, Silver down 0.5%, Copper down 2.4% and Iron Ore was down 0.5%. RatingDog Services PMI is due to be released today out of China, expected at 52.5 from 52.9.
USD
The AUDUSD falls to a 2-week low, with the USD hitting a 3-month high on the DXY last night, seeing the pair open this morning at a rate of 0.6487. Wall Street shed gains overnight, with the DOW JONES down 0.7%, S&P 500 down 1.2% and the NASDAQ down 1.9%. This is largely due to safe-haven flows as US stock markets sold off amid AI valuation jitters and broader concerns about the US economy. The US Dollar strength was in defiance of ISM Manufacturing data coming under expectations. Manufacturing PMIs read 48.7 (expected at 49.1) and prices fell to 58 (expected at 61.9). ADP Non-Farm Employment Change is due tonight, expected to increase to 32k from -32k; this may have an amplified effect with government employment data not being released in the government shutdown.
EUR
The AUDEUR fell off yesterday, falling to a weekly low last night, opening this morning at a rate of 0.5650. European equities closed the day lower, with the DAX down 0.8% and the CAC down 0.5%. ECB President Lagarde spoke twice last night at a eurozone conference, but effecting the markets. It is a flurry of low-tier data to finish the week, with French, German, Spanish and Italian Services PMI’s to be released, expected to come in largely unchanged.
GBP
The AUDGBP opens the day flat, with the pair taking a dip during the day that recovered overnight, opening this morning at 0.4981. British Equities where similar into the close, with the FTSE finishing up 0.1%. MPC Member Breeden Spoke last night, not effecting markets. Final Services PMIs are out tonight, expected to remain at 51.1. All eyes will be on Thursday’s Rate Decision, widely expected to remain at 4%.
NZD
The AUDNZD surged up since yesterday, pushing up to a 12 year high, opening this morning at a rate of 1.1502. The NZ Labour report came in much weaker, with the Employment Change q/q reading a 0.0%, expected to increase 0.1% from -0.2%. The Unemployment Rate read 5.3% as expected, up from 5.2%. This is a poor result for the struggling NZ economy, which would push for further rate cuts to help jump-start their economy. RBNZ Gov Hawkesby speaks later this morning, in which he will be in a press conference about the financial stability report, which could give insight into the direction they are looking to take.