AUD Recovers as Middle East Optimism Grows
AUD
The AUD opens up against the major currencies, as optimism on the Middle East conflict allowed investors to unwind from safe-haven positions and into risky assets such as the AUD. Yesterday saw Aussie GDP q/q release at 0.8%, surpassing expectations of 0.7% and showing the highest quarterly growth in 2.5 years, which supports expectations that the Reserve Bank of Australia will maintain a cautious monetary policy stance. Asian equities saw a large dip, with the ASX -1.9%, Shanghai Comp -1.0% and Nikkei -3.6%. Commodities followed suit, with the largest movers being Natural Gas -10.0%, Coal -2.5% and Silver +1.9%. No major economic data due to be released today, outside of Goods Trade Balance and Household Spending m/m at 11:30AM AEST.
USD
The AUDUSD opens at 0.7077, recovering from yesterday’s lows of 0.6986 as the US Dollar dips from Middle East optimism. Iran's Ministry of Intelligence have signaled to the U.S. Central Intelligence Agency that they were willing to discuss avenues to peace and an end to the strikes. Wall Street continued to boom, with the Dow Jones closing +0.8%, S&P 500 +0.9% and Nasdaq +1.6%. Last night saw the latest ADP Non-Farm Employment Change release at 63K (above expectations of 50K) and ISM Services PMI release at 56.1 (above expectations of 53.5), however markets had muted reactions due to the recent history of the US Department of Labor revising their figures afterwards and that hiring remains concentrated in a limited number of sectors. Tonight will see US Unemployment Claims release with expectations of 215K.
EUR
The AUDEUR opens at 0.6082, touching one-year highs of 0.6088 as markets are bearish on the Euro due to surging energy prices. European equities recovered from yesterday’s losses, with the DAX +1.7% and CAC +0.8%. A flurry of minor economic data was released out of the Eurozone, with most of the data meeting expectations. Tonight will have more minor economic data, as well as ECB President Lagarde speaking at the Annual Global Risk Lecture. A majority of the volatility should come from markets readjusting position based on information out of the Middle East.
GBP
The AUDGBP opens at 0.5291, recovering from yesterday’s lows of 0.5247 due to AUD strength. The FTSE recovered and closed +0.8%. No data of note was released yesterday and will be the same for the rest of the week. The next economic data piece of note will be GDP m/m on March 13.
NZD
The AUDNZD opens at 1.1915, recovering from yesterday’s lows of 1.1864 as markets moved towards the AUD. The Aussie's relative strength compared to the Kiwi's, reflects Australia's position as a net energy exporter, while New Zealand largely relies on energy imports. Yesterday had ANZ Commodity Prices m/m release at 4.2%, with no data today.