Aussie Dollar Loses Traction Ahead of CPI Release

AUD

The Aussie Dollar opens mixed against the majors this morning as uncertainty shrouds US negotiations with Iran to end the war. Asian equites ended higher yesterday, the Hang Seng +2.8%, Nikkei +1.4% and Shenzhen +1.3%. Locally the ASX 200 finished +0.15% as materials and utilities sectors outperformed at +2.9% and +1.2% respectively. Later this morning, Aussie CPI data is set to release with inflation expected to hold steady at 3.8% YoY and come in flat on a monthly basis. However, with higher energy prices as a result of the war Iran posing an upside risk to the RBA’s inflation forecast, the results will likely have a limited impact on any RBA decisions. The rest of the economic calendar for the week is quiet for Australia and any movement will be off the back off ongoing geopolitical headlines.

USD

AUDUSD dips slightly overnight at 0.6991 due to the Greenback strengthening as investors dialed back expectations for a quick end to the Middle East conflict. The U.S is said to be sending more military assets to the Middle East including an airborne division, suggesting that there could be a ground invasion or US troops on Iranian soil, while Trump is also declaring that talks to end the war are 'happening now'. U.S. equity futures rallied late in the session as S&P 500 futures were trading +.4% late in the North American session. U.S. 10-year yields rose 2bps to 4.36%, while Brent Crude rose 2% to $103.00 a barrel. Yesterday, Flash Manufacturing PMI came in at 52.4 (Exp. 51.5) and Flash Services PMI came in at 51.1 (Exp. 52.0). Investors gave a muted reaction to data on U.S. business activity, which slowed to an 11-month low in March as the war raised energy and other input costs, reinforcing concerns that inflation could accelerate. The next major data point for the U.S. will be Unemployment Claims on Thursday which is currently forecasted at 211k.

EUR

AUDEUR opens relatively flat at 0.6024 following news that the Australia-EU trade deal was finally agreed to, which is set to cut more than 99 per cent of tariffs on EU goods coming into Australia. European equities closed mixed with the DAX and CAC coming in at -0.1% and +0.2% respectively. Eurozone PMI data was also released yesterday and indicated that output growth slowed in March as input cost inflation hits highest for over three years. The rest of the week is looking quiet data wise for the Eurozone.

GBP

AUDGBP opens flat this morning at 0.5215 and the FTSE closed in the green at +0.7%. The UK also had their Manufacturing and Services PMI's released yesterday evening coming in at 51.4 and 51.2 respectively. Manufacturing proved more resilient than services, though the composite gauge still ended up far lower than anticipated. The dramatic surge in prices for factories was the most since the impact of the pound’s slump after the Black Wednesday crisis of 1992. Later today UK CPI y/y will release, currently forecasted at 3.0%.

NZD

AUDNZD recovers slightly overnight coming in at 1.1982 as markets reacted to RBNZ Governor Breman's remarks yesterday morning implying a more hakwish tone. Nothing for the Kiwi until next Tuesday with ANZ Business Confidence.