Aussie Dollar Stalls as Middle-Eastern Tensions Reignite

AUD

The AUD opens flat against the major currencies despite a volatile night driven by Middle East tensions and a US bond rally, as markets wait for the RBA’s interest rate decision in under two weeks. Markets are currently pricing in a 50% chance of an interest rate hike on November 3. On equities, the ASX closed -0.4%, Shanghai Comp -1.5% and Nikkei -2.7%. Commodities had mixed price movements, with Brent crude rising above US$111 a barrel, Wheat -0.6% and Cotton -1.3%. Today will have Australia’s flash PMIs and Japan’s national CPI for September.
 

USD

The AUDUSD opens flat at 0.7019 despite a strong rally in US Treasuries overnight, as markets wait for the US Federal Reserve’s interest rate decision next week. Markets are currently pricing in around a 17% chance of an interest rate hike. However, commentary will be key to future volatility as markets currently price around an 83% chance of a hike at the December 9 interest rate decision. On equities, the Dow Jones closed flat, S&P 500 -1.2% and Nasdaq -2.6%. Tonight, will have US flash PMIs and the final University of Michigan consumer sentiment reading.
 

EUR

The AUDEUR opens flat at 0.6256, trading sideways between 0.6230 and 0.6266 despite French 10-year bond yields rising above US yields for the first time since the eurozone crisis. European equities closed lower overnight, with the DAX -1.1% and CAC -1.4%. Tonight will have Manufacturing and Services PMIs released from the Eurozone, with expectations that both sectors have grown.
 

GBP

The AUDGBP opens flat at 0.5238, trading between 0.5228 and 0.5249 over the past 24 hours as there was no major economic data out of the UK. UK equities closed lower, with the FTSE -0.3%. Tonight, will have Retail Sales m/m (exp. -0.2%), as well as Flash Manufacturing PMI (exp. 51.8) and Services PMI (exp. 51.8).
 

NZD

The AUDNZD opens flat at 1.2342, trading between 1.2310 and 1.2366 over the past 24 hours despite New Zealand’s September quarter CPI rising 3.7% y/y, below the RBNZ’s 3.9% forecast. The next major economic news out of New Zealand will be the RBNZ’s interest rate decision on October 28. Markets currently expect an 80% chance of an interest rate hike, with some economists expecting a further hike at the December meeting.