AUD Weakens as Middle East Tensions Escalate

AUD

The AUD takes a tumble against the major currencies over the weekend as Middle-Eastern conflicts continue to place a damper on markets and general risk sentiment. Asian equities were down as a result, with the ASX -0.8%, Shanghai Comp -1.2% and Nikkei -3.4%. Commodities followed suit, with Silver -6.6%, Nat Gas -3.5% and Copper -3.1%. No economic data on Friday and today, with our Flash Manufacturing PMI and Flash Services PMI due for release tomorrow morning and CPI data on Wednesday which may well become quickly dated as it tracks inflation before the Iran war flared up. The AUD can be expected to track with overall risk-sentiment due to its dependance on commodity exports.

USD

The AUDUSD drops over 1% and opens at 0.6997, losing the 0.7000 this morning as the US and Iran conflict continues to threaten global supply chains. On Wall St., the Nasdaq closed -2%, the S&P 500 -1.5%, and the Dow Jones -1%. U.S. 10-year yields rose 13bps to 4.38%, while Brent Crude closed at $109.50 a barrel. Precious metals declined with Gold -2.7% to $4490, and Silver -4.8% to $67.90 an ounce. US President Donald Trump said over the weekend that they will “obliterate” Iran’s energy infrastructure if they refuse to open the Strait of Hormuz within 48 hours. Signs of prolonged war in the US-Israeli war with Iran could drive traders back to safe-haven currencies such as the Greenback. No US economic data today, with US Manufacturing and Services PMIs releasing tomorrow night.

EUR

The AUDEUR opens down at 0.6061 this morning due to escalating global risk. European equities tracked with equities globally, as the DAX closed -2.0% and CAC -1.8%. Late Friday evening the Euro Current Account released above expectations of 17.2B at 37.9B showing a 13B improvement from the previous month. No economic data today, with Consumer Confidence early tomorrow morning and European Manufacturing and Services PMIs releasing tomorrow night.

GBP

The AUDGBP opens lower at 0.5261, touching two-week lows as both countries are expected to struggle with supply chain disruptions in the Middle-East. It’s been a quiet period data-wise from England, with the FTSE closing -1.4%. The next  major data piece for the UK will be Manufacturing and Services PMIs tomorrow night.
 

NZD

The AUDNZD opens slightly lower over the weekend at 1.2027. Tomorrow morning RBNZ Gov Breman is due to speak about potential impacts of the Middle East conflict on the New Zealand economy at the BusinessNZ CEO Forum, in Auckland.