Equity Correction Casts Shadow Over FX Market

AUD

The Aussie Dollar has rebounded after seeing a sell-off yesterday, driven by a correction after markets readjusted their concerns of equity overvaluations. Asian equities were still down with the ASX -0.1%, Shanghai Comp +0.2%, however mostly from the Nikkei -2.5%. Commodities followed suit, with the largest movers being Natural Gas -2.4%, Crude Oil -1.6% and Copper +1.0%. No economic data out of Australia yesterday, however Chinese RatingDog Services PMI released as expected at 52.6. No major economic data out of Australia for the rest of the week, however Chinese inflation figures will be released on Sunday with current expectations of a drop in Chinese PPI y/y.
 

USD

The AUDUSD opens higher at 0.6507, picking up from it’s lows of 0.6458 yesterday before trading at current levels. The AUDUSD had taken a hit yesterday due to worries in the American stock market, however this was corrected yesterday with Wall Street closing strong (Dow Jones +0.6%, S&P500 +0.8%, Nasdaq +1.2%). Last night saw ADP Non-Farm Employment Change and ISM Services PMI release above expectations at 42K and 52.4 (expectations of 32K and 50.7), indicating that the American economy is performing well. No major economic data is due to be released tomorrow, however FOMC Member Waller will speak, potentially hinting at the US Federal Reserve’s plans on monetary policy.
 

EUR

The AUDEUR opens at 0.5662, trading between 0.5623 and 0.5672 yesterday as markets yo-yoed on concerns about riskier assets. A set of Services PMIs out of the Eurozone countries were released yesterday - all higher than expected – further boosting the confidence in the Eurozone economy. European equities matched this sentiment and closed slightly higher, with the DAX +0.4% and CAC +0.1%. A few minor economic data pieces will be released for the rest of the week, with a bulk of the volatility in the currency pair arising from global factors.
 

GBP

The AUDGBP opens at 0.4986, continuing its strongest week since mid-February ahead of the BOE’s rate decision tonight. BOE’s members are split between cutting or holding interest rates with current expectations of the members voting towards a hold in this decision. Last night had Final Services PMI release above expectations, hinting that the British economy was holding decently well regardless of future rate cuts. No data out of England for the rest of the week following BOE Gov Bailey speaking once the decision is made.
 

NZD

The AUDNZD opens flat at 1.1494, having hit 12-year highs yesterday following a lack of confidence in the Kiwi economy. RBNZ Gov Hawkesby spoke yesterday regarding New Zealand’s financial stability, however market reactions were muted. No more data from New Zealand for the rest of the week.