AUD Holds Steady Over the Weekend
AUD
The AUD opens slightly higher against most major currencies, with no significant moves over the weekend due to the absence of domestic data releases. The currency has begun to recover from Thursday’s sharp drop following the weaker-than-expected employment report, which has upped market expectations of an interest rate cut from the Reserve Bank of Australia in August. Aussie equities mirrored this recovery, with the ASX gaining 1.4% and the Shanghai Composite up 0.5%, reflecting a modest rebound in sentiment. The weekend remained quiet on the data front, with the G20 meeting being the only notable event. Attention now turns to tomorrow’s release of the RBA Monetary Policy Minutes, which will offer further insight into the central bank’s assessment of inflation trends, broader economic conditions and surprise decision to hold the cash rate at 3.85% earlier in the month.
USD
The AUDUSD opened higher at 0.6510, supported primarily by domestic factors, as positive US data over the weekend failed to strengthen the USD as much as anticipated. A relatively subdued session on Wall Street saw the Dow Jones close down 0.3%, while the S&P 500 and Nasdaq ended the day flat. On Saturday, the University of Michigan’s Preliminary Consumer Sentiment index came in stronger than expected at 61.8 (vs. 61.4 forecast and 60.7 prior). However, inflation expectations eased to 4.4% from the previous 5.0%, which softened the overall impact on the USD. Looking ahead, the key event will be Fed Chair Powell’s speech, scheduled for tomorrow, with markets watching closely for any shift in tone around inflation risks and the future path of interest rates.
EUR
The AUDEUR opens flat at 0.5598 after a quiet weekend on the data front. Despite the slight uptick, the Euro remains firm, continuing to benefit from its status as a relative safe haven amid ongoing global uncertainty and cautious investor sentiment. This underlying EUR strength has capped further upside for the AUD. Eurozone equities had a mixed session, with the CAC 40 flat on the day while the DAX edged up 0.3%. The data calendar remains quiet until Thursday, when key euro area will see Flash PMIs and the European Central Bank interest rate decision.
GBP
The AUDGBP opens a tad higher at 0.4853, continuing to ride the momentum of the Aussie’s recovery following last Thursday’s sharp decline. British equities showed slight gains, with the FTSE 100 closing up 0.2%, reflecting cautious optimism among investors. Looking ahead, attention turns to a scheduled speech by Bank of England Governor Andrew Bailey tomorrow. Markets will be closely monitoring his remarks for any clues on the BoE’s policy outlook, particularly in the context of persistent inflation pressures and recent mixed UK economic data. Any shift in tone regarding the pace or timing of future rate moves could impact GBP direction.
NZD
The AUDNZD opens at 1.0941 and is beginning to show upward volatility following this morning’s release of New Zealand’s CPI data, which came in at 0.5% quarter-on-quarter, below both the expected 0.6% and the previous 0.9%. The yearly figure printed at 2.7%, below expectations of 2.8% to 2.9%, paving the way for another interest rate cut from the Reserve Bank of New Zealand in August, where the Official Cash Rate is expected to be cut by 25bps to 3.00%. With no major data scheduled out of New Zealand until next month, near-term movement in the pair is likely to be driven by Australian factors and broader market sentiment.