AUD Down with Escalating Middle Eastern Tensions
AUD
Escalation in the Middle east sees the Aussie dollar drop, following Friday’s Israeli surprise attacks on Iran and ensuing retaliatory attacks leading to a heightened risk sentiment, with markets holding their breath to see where these actions lead. Commodities had a mixed performance, with Iron Ore down 0.1% and Copper down 1.7%, whilst Oil gains 8.1% with supply concerns, Nat Gas was also up big at 5.8%. Gold continued to climb 1.4% and Silver closed down 0.2%. Asian Equities finished lower, with the ASX down 0.2% and Shanghai Comp down 0.8%. Looking at the economic data, Chinese New Loans came in under at 620B, expected at 890B from 280B. Today will see another dump of Chinese data, including Industrial Production y/y, expected to soften from 6.1% to 5.9% and Retail Sales y/y also expected to come in lower, at 4.9% from 5.1%. Markets will be looking to weigh the effects from the US-China trade tariff skirmishes.
USD
The AUDUSD opens the week lower at 0.6485 after immediately surrendering the 0.65 handle on Friday following the announcement of Israeli airstrikes on Tehran, with the pair slowly recovering from a low of 0.6456. Wallstreet was sold off amidst the risk-off sentiment, seeing the S&P 500 closing down 1.1%, NASDAQ down 1.3% and the DOW JONES leading, down 1.8%. Middle Eastern tensions are still high following retaliatory strikes launched from Iran, with hopes of diplomatic solutions fading, in particular the US-Iranian nuclear proliferation deal. Friday night saw The University of Michigan Sentiment Survey print at 60.5, up from 52.2 and above expectations of 53.6 with significant beats in Current Conditions and Expectations. 1 year inflation expectations fell to 5.1% from 6.6%, lower than forecasts of 6.4%. Tonight will see the Empire State Manufacturing Index, set to increase from -9.2% to -5.9%. Looking forward, thus Thursday night has the Federal Funds Rate, expected to remain unchanged at 4.50%.
EUR
The AUDEUR has seen small losses to start the week, with the pair dropping below the 0.56 barrier off the back of the aforementioned Middle Eastern tensions, opening at 0.5622 this morning. European Equities also took a hit, with the CAC down 1% and the DAX down 1.1%. Friday saw Industrial Production m/m slip to -2.4%, previously 2.4%, expected at -1.6%. A quiet data week ahead for the Eurozone, with Tuesday’s German ZEW Economic Sentiment to be the key piece for the week, expecting a large growth from 25.2 to 34.8.
GBP
The AUDGBP sees small loss to stark the week, with a large drop on Friday morning, with the pair slowly regaining over the weekend, opening this morning at 0.4785. British Equities were soft into the close, with the FTSE finishing down 0.4%. Friday saw Consumer Inflation Expectations lower 0.2% to 3.2%. This week will kick off on Wednesday with their inflation y/y figure, leading into their Bank Rate on Thursday, currently expected to remain at 4.25%.
NZD
The AUDNZD opens the day higher, with the pair steadily grinding slowly higher since Friday, opening this morning at a rate of 1.0792. There was no news out to finish the week, with BusinessNZ Services Index coming in softer this morning at 44, previously 48.1. Looking forward this Thursday’s GDP q/q will be crucial for the Kiwi’s expected to remain at 0.7%.