Aussie Dollar Retreats as Trump Delays Iran Strikes
AUD
The Australian Dollar opens mixed this morning against the majors bar the USD which saw a slight rebound as easing geopolitical tensions weakened safe-haven demand. Asian equites ended weaker across the board yesterday, the Nikkei and Hang Seng at -3.5%, the Shenzhen -3.3%. Locally the ASX 200 finished -0.7% as materials and real estate sectors led losses at -2.4% and -1.2% respectively. Earlier this morning Australian Flash Manufacturing & Services PMI released coming in at 50.1 and 46.6 respectively. Traders will be alert to headlines out of the Middle East this week, with any news positive or negative likely to meaningfully impact financial markets.
USD
AUDUSD regains its 0.70 handle opening higher this morning at 0.7014 after Trump said he had instructed the Department of War to postpone strikes on Iranian power plants for five days, pending the outcome of ongoing discussions. Wall St. reacted positively to the news with the Dow Jones trading +1.5%, the Nasdaq +1.4%, and the Dow Jones +1.1%. U.S.10-year yields fell 5bps to 4.33%, while Brent Crude fell 12% and back below $100 a barrel. Out of the US overnight we will see their Flash Manufacturing and Services PMI’s with manufacturing set to drop while services are set to rise. Overnight the Richmond Manufacturing Index will also be released set to increase slightly.
EUR
AUDEUR opens lower this morning at 0.6034 after Trump postponed Iran strikes, easing fears of deeper oil shocks boosting the EUR. Eurozone equities closed in the green with the DAX +1.2%, and the CAC +0.8%. The Australia-EU trade agreement is expected to get the green light later today. The deal is set to slash tariffs on countless goods, with Albanese declaring during Question Time on Monday that an EU trade deal would "give Australian farmers and growers and exporters better access to a market of 450 million consumers". It will be a busy day for the Eurozone with a flurry of Flash Manufacturing and Services PMI’S set for release later this evening, with both Manufacturing and Services set for a drop.
GBP
AUDGBP opens down, hitting one-month lows at 0.5221. UK equities closed in the red with the FTSE -0.2%. Nothing of note yesterday out of the UK, however later this evening we will get the release of their Flash Manufacturing, and Services PMI’S with both Manufacturing and Services forecasted for a drop compared to the previous release.
NZD
AUDNZD opens lower this morning losing its 1.20 handle at 1.1965 hitting near 2-week lows. Nothing from our Kiwi neighbours yesterday however earlier this morning the Reserve Bank of New Zealand’s Governor Anna Breman noted that the central bank is prepared to look through a temporary rise in energy-driven inflation stemming from the Middle East conflict, but warned that a more persistent shock could require tighter monetary policy to prevent inflation from becoming entrenched. No further news is expected to be released this week.