AUD Recovers on Middle Eastern De-Escalation Hopes

AUD

The AUD opens higher against the major currencies, bolstered by Israel-Iran ceasefire hopes. Commodities were down overall, with Oil –2.2%, Gold -0.4%, Silver -0.2%, Iron Ore -0.7% and Wheat -1.2%. Asian equities were inversed, with ASX basically flat (up one point), Shanghai Comp +0.3% and Nikkei +1.3%. Chinese Retail Sales were released much better than expected, at +6.4% y/y vs. 4.9% y/y, helped partly by promotions of products stranded as shipments were suspended due to higher tariffs. On the other hand, China's factory output slowed in the face of higher US tariffs (Industrial Production y/y +5.8%, previously +6.1%). Overall, economists said the world's second-largest economy has weathered the threat of hikes in tariffs relatively well, although signs of weakness persist as a slump in the property market has yet to reverse. No news today except for any developing news in the Middle East and the next economic data piece will be on Thursday with our employment data. This information will play a large part in the RBA’s next rate decision as our strong labour market has led to doubts of a rate cut.
 

USD

The AUDUSD opens higher at 0.6514, reaching the 0.6550 barrier for the first time this year after seeing a drop to 0.6442 yesterday. The USD, which traditionally has been the safe haven currency until recently, saw a decline after increased tensions between Israel and Iran over the weekend. Wall Street saw a boost yesterday after the Dollar dropped, with the S&P500 +0.9%, Dow Jones +0.8% and NASDAQ +1.5%. No economic news released yesterday, although tonight we will see their monthly Retail Sales data; current expectations are that they are lower than last month. 
 

EUR

The AUDEUR opens at 0.5638, retracing losses of 0.5702 to 0.5592 last week to current levels overnight. The DAX and CAC followed suit – as they improved +0.8% and +0.7% respectively. It’s been a relatively quiet past few days in Europe, with no major data releases in the past week. Tonight will have German ZEW Economic Sentiment releasing at 7pm, with current expectations that there will be an improvement from last month.
 

GBP

The AUDGBP opens at 0.4800, improving from 0.4761 on Friday to current levels. On equities, the FTSE also closed +0.3%. No news yesterday and today, with the new data piece being CPI y/y (expectations of 3.3%). This will be the last data release until the central bank meeting on Thursday, with current expectations that they will hold after a series of rate cuts.
 

NZD

The AUDNZD opens slightly lower at 1.0759, trading between 1.0729 and 1.0791 so far this month. Today, the Food Price Index released at +0.5%, a slower pace of increase than the previous month's +0.8%. The next major release is Thursday, with GDP q/q expected to be 0.7%.