Middle East Escalation Fuels Safe Haven Demand

AUD

The Aussie Dollar has fallen against the majors after risk sentiment disintegrated following the U.S. bombing of three Iranian nuclear facilities, with increased safe haven flows as markets watch for Iranian retaliation. A mixed day for Asian equities saw the Hang Seng end +1.3%, Shenzhen +0.1% and Nikkei -0.2%. Locally the ASX shed -0.2%, with consumer staples and consumer discretionary leading losses at -0.9% and -0.6%. Commodities were mostly down also with Gold -0.1%, Silver -1.1%, Copper -0.4%, and only Iron Ore came through in the green +0.1%. Earlier this morning we had the release of our local Flash Manufacturing and Services PMIs with Manufacturing coming through at 51.0 same as previous, and Services increasing to 51.3. The data indicated business activity in Australia's private sector expanded at a faster pace in June. This was underpinned by greater new business inflows, though export orders fell at a sharp rate. No further data for the day and our next key event will be our CPI y/y set for release Wednesday morning.
 

USD

AUDUSD opens this morning at three-week lows of 0.6444 with the AUD sold off heavily in the aftermath of the U.S. bombing of Iran’s nuclear sites. With the main focus being on whether Iran would retaliate, the Philly Fed Manufacturing Index slipped through without much reaction, coming through under forecasts at -4.0%. Wall Street closed mixed with the Dow Jones +0.1%, the S&P 500 -0.2%, and the Nasdaq -0.5%. Looking ahead at US data releases later this evening, we will get the Flash Manufacturing PMI (exp. 51.1) and Flash Services PMI (exp. 52.9). Existing Home Sales follows shortly after at midnight also expected to decrease. FOMC Member Waller will also be speaking.
 

EUR

AUDEUR opens lower to start the week, barely holding on to the 0.56 handle, opening at 0.5603, after the Euro strengthened over markets shifting to safe haven currencies with nothing else major being released over the weekend. Eurozone equities closed Friday in the green with the DAX +1.3% and the CAC 0.5%. Looking ahead at Eurozone data, tonight will hold Flash PMIs.
 

GBP

AUDGBP opens lower to start off the week at 0.4796 with deteriorating risk sentiment outsizing weaker UK Retail Sales on Friday. Retail Sales came through much lower at -2.7%, from forecasts of -0.5%, being the sharpest decline since December 2023. The decline was mostly driven by a large fall in food sales, which saw their lowest reading since mid-2021. The FTSE also closed in the red -0.2%. Looking at UK data today there will be the Flash Manufacturing and Services PMI releases later this evening at 6:30p, forecasted to improve.
 

NZD

AUDNZD opens basically flat to start of the week at 1.0804 after our Kiwi neighbours return from the Matariki break. Nothing set for release data wise out of NZ today, however, tomorrow there will be the release of their Credit Card Spending with no forecasts at present.