AUD Underpinned as Trade Deals Buff Sentiment
AUD
The Australian Dollar opens higher against the majors this morning bar the NZD after US and Japan trade deals buffed market risk sentiment. Asian equities also finished the day stronger, with the Nikkei +3.5% after a tariff deal was struck between Japan and Trump, Hang Seng +1.6% and Shenzhen flat. The ASX closed +0.7%. Commodities followed suit with Gold +0.1, Silver +0.4%, Iron Ore +0.2%, and Copper being the biggest performer +1.9%. Looking at local releases today earlier this morning Australian Flash Manufacturing, and Services PMIs were released with both Manufacturing, and Services increasing from the previous month. The data shows business activity growth in Australia accelerated at the start of the third quarter, underpinned by a renewed rise in manufacturing output and faster services activity growth. RBA Governor Michelle Bullock will also be speaking later this afternoon at the Anika Foundation in Sydney with guest questions expected.
USD
The AUD/USD coupling opens at its highest point in since early November 2024 at 0.6602 after the greenback struggled on Wednesday after U.S. President Donald Trump announced a trade deal with Japan, bolstering optimism for more agreements ahead of an impending tariff deadline. U.S. Existing Home Sales also missed forecasts, coming through lower at 3.93M. US equities closed in the green with the Dow Jones +1.1%, S&P 500 +0.8%, and Nasdaq +0.6%. It will be a big day for US news events with Unemployment Claims and Flash Manufacturing and Services PMIs all set for release later this evening. Unemployment Claims are forecasted to increase to 227K, while Flash Manufacturing is forecasted to decrease slightly to 52.7, and Services set to increase slightly to 53.0.
EUR
The AUD/EUR coupling opens higher at 0.5607, regaining its 0.56 handle late last night, after what was a quiet data release day with only German 10-y Bond Auction, and Consumer Confidence which came through as forecast. Eurozone equities closed in the green with the DAX +0.8%, and the CAC +1.4%. Today will be the biggest news day for the Eurozone for July with their Flash Manufacturing and Service PMI’s set for release later this evening with the services sector expected to expand and the manufacturing slump expected to continue, albeit at a slower pace of contraction than previously. The ECB is also set to release their Main Refinancing Rate at 10:15pm with forecasts expecting no change to the rate at 2.15%, however, while recent data are unlikely to have materially affected the ECB’s views on the economy and inflation, the renewed threat of tariffs poses a downside risk (President Trump has threatened a 30% reciprocal tariff rate, higher than both the current 10% rate and the 20% rate initially imposed in April). Further appreciation of the euro since the ECB’s June meeting may also weigh on growth expectations at the margin.
GBP
AUD/GBP opens higher this morning at 0.4860 with nothing released out of the UK yesterday. UK equities closed in the green with FTSE +0.4%. Later today the UK will also be releasing their Flash Manufacturing and Services PMIs at 6:30pm with the manufacturing slump expected to continue, at 49.7, and Services forecasted to remain at 52.8. CBI Industrial Order Expectations will follow at 8pm with forecasts showing a slight improvement to -27.
NZD
AUDNZD opens flat this morning at 1.0918 after New Zealand dollars held firm on Wednesday as news of a potential U.S. trade deal with Japan salved risk sentiment. Nothing of note from our Kiwi neighbours for the rest of the week with their next release set for next Tuesday.