Boosted Safe-Haven Demand Puts AUD Under Pressure
AUD
AUD opens considerably weaker against the major currencies due to an increase in safe-haven demand as the situation in the Middle East deteriorated overnight after Iran rejected the U.S. ceasefire proposal. This rejection saw U.S. President Trump threaten an escalation of military action while admitting he was unsure if a diplomatic agreement could be reached. A slight recovery was seen earlier this morning as Trump then gave a 10 day extension to his plan to destroy Iranian energy plants. Asian equites ended lower yesterday with the Hang Seng at -1.9%, Shenzhen at -1.3% and Nikkei at -0.3%. Locally the ASX 200 finished -0.1% as technology and communication services sectors led losses of -2.3% and -0.9% respectively. NAB Quarterly Business Confidence out this evening potentially, otherwise a quiet rest of the week locally, no news out of Asia beyond equities.
USD
The AUDUSD opened in the red falling roughly 60 basis points overnight to open at 0.6891 as signs that the US and Iran were very far apart on a peace deal revived the risk of a prolonged energy shock and boosted safe-haven demand. Risk assets were all heavy including on Wall St. where the Nasdaq was trading -2.4%, the S&P 500 -1.8%, and the Dow Jones -1.1%. U.S. 10-year yields rose 8bps to 4.42%, while Brent Crude rose 5.6% to $108 a barrel. Gold and Silver remained soft at $4380 and $67.15 an ounce, respectively. U.S. weekly jobless claims data was released early in the NY session with initial claims matching expectations of 210k while continuing claims fell, today an array of FOMC members speaking throughout the morning to round out the week.
EUR
AUDEUR loses its 0.6 handle overnight, opening at 0.5970 following increased safe-haven demand. The DAX and the CAC closed in the red as well, coming in at -1.5% and -1.0% respectively. Recent economic releases this week have pointed to a slowdown in the Eurozone economy with Germany’s GfK Consumer Confidence for April falling to -28, missing expectations, while the Ifo Business Climate index dropped to a 13-month low of 86.4 in March. Looking ahead to next week we have German Prelim CPI m/m on Monday, Core CPI Flash Estimate y/y on Tuesday and a flurry of Manufacturing PMI data on Wednesday.
GBP
AUDGBP continues its losing streak opening at 0.5161 this morning, The FTSE also closed at -1.3%. Later tonight UK Retail Sales m/m is set to release and is currently forecasted at a -0.6% retraction after hitting +1.8% previously. Next week will be quiet data wise for the GBP.
NZD
AUDNZD opens in the red at 1.1953 this morning following global trends. With a quiet week ahead for the Kiwi, it will be at the whim of any geopolitical headlines over the weekend.