Quiet Conditions Leave AUD Range-Bound
AUD
The AUD opens flat against the majors with no significant directional shifts overnight. Market conditions remain largely range-bound as key drivers took a backseat and volatility stayed muted. A similar effect in the Aussie equities with the ASX seeing no movement and Shanghai Comp increasing slightly by 0.4%. On the data front there were no major releases yesterday. Attention now turns to today’s monthly Retail Rales figures which are forecasted to rise 0.3% m/m (previously released at 0.1%) and could offer some short-term direction for the AUD. Attention also remains on next week’s anticipated tariff announcements which are expected to provide clearer direction particularly for USD linked pairs and risk-sensitive currencies like the AUD.
USD
The AUDUSD opens flat at 0.6581 despite the release of some notable economic data. This muted reaction suggests that macroeconomic data is currently taking a backseat to broader geopolitical developments. Markets remain focused on the U.S. role in the ongoing Middle East conflict which has quieted since the ceasefire took effect as well as the anticipated tariff announcements next week. U.S. equities slipped yesterday with the S&P 500 edging down 0.1% and the NASDAQ falling 0.8%. Overnight, Fed Chair Powell said rate cuts would likely have occurred if not for Trump’s tariffs which drove up inflation forecasts. The Fed remains in wait-and-see mode with July’s decision dependent on upcoming data. Also overnight, the ISM Manufacturing PMI printed at 49.0, with little sign of the US manufacturing slump slowing. Businesses continue to face rising costs and less demand even after tariffs are reduced. Tonight, we'll see the ADP Non-Farm Employment Change.
EUR
The AUDEUR opens flat at 0.5575 with significant risks surrounding other major currencies the Euro has continued to stand out as a preferred safe haven for investors. Meanwhile European equities are feeling the cautious mood with the DAX down 1.0% while the CAC remains flat at 0.0%. Yesterday, ECB President Christine Lagarde reiterated that the fight against inflation is ongoing. Despite some progress inflation remains too high and the ECB will maintain a restrictive monetary policy until sustained easing is evident. She also noted slowing Eurozone growth but stressed that price stability remains the central bank’s priority. No major economic data is scheduled for release today though market attention will turn to ECB President Lagarde’s speech tomorrow which could provide further insight into the central bank’s policy direction.
GBP
The AUDGBP opens flat at 0.4789 compared to yesterday with no major market-moving events impacting the pair. British equities saw a minor increase of 0.3%. Looking ahead, no major economic data releases are expected until Sunday when Bank of England Governor Andrew Bailey is scheduled to speak again.
NZD
The AUDNZD opens slightly lower at 1.0787 showing little movement as no major factors are currently pushing the pair in any direction. Market activity remains subdued with nothing noticeable on the economic calendar until the 9th when both the Official Cash Rate and the Reserve Bank of New Zealand’s Rate Statement are due. Traders are likely to stay cautious and range-bound until those key events provide clearer guidance.