Safe Haven Demand Causes Aussie Dollar to Slide

AUD

The Aussie Dollar opens down against the majors over the weekend bar a slight bump against the Euro as the repercussions of the ongoing conflict in the Middle East continue to effect global markets, causing a spike in energy prices. The spike in energy prices has stoked fears of a resurgence in inflation, prompting shifts in rate outlooks for major central banks. Asian equites ended the week mixed, the Hang Seng +1.7%, Nikkei +0.6% and the Shenzhen +0.3%. Locally the ASX 200 shed -1% as materials and real estate sectors led losses at -4.1% and -0.6%. Over the weekend RBA Deputy Governor Andrew Hauser spoke about the safe-haven status of the US dollar at the US Monetary Policy Forum, in New York. He mentioned "There is little sign yet of a persistent decline in perceived security (of the US dollar)" and that the US Dollar has not played its usual role as the global reserve currency in the last 12-18 months, depreciating rather than appreciating due to uncertainty over US policy and declines in equity prices. It's a quiet week ahead on the data front, and anything published is likely to be somewhat inconsequential given the war in the Middle East. China releases both consumer (CPI) and producer (PPI) inflation data later today.
 

USD

AUDUSD loses its 0.7 handle over the weekend, opening at 0.6988 as investors continue to seek out safe haven assets due to the ongoing Middle Eastern conflict. Earlier hopes for a de-escalation of the Iran war gave way to fresh uncertainty and concerns about how long the conflict could drag on. Choppy conditions remained on Friday as risk sentiment whipsawed on the Iran conflict and U.S. employment. Wall St. ultimately ended lower with the Nasdaq closing -1.6%, the S&P 500 -1.4%, and the Dow Jones -.9%.  U.S. 10-year yields were steady at 4.14%, while Brent Crude rose 8.5% to $92.60 a barrel. Gold and Silver closed at $5,172, and $84.45 an ounce, respectively, while the VIX rose 24% and to levels not seen since April 2025. Saturday morning saw a flurry of US economic data out with some mixed results. Average Hourly Earnings m/m came in at +0.4% (exp +0.3%), Core Retail Sales m/m came in flat at 0.0% (exp 0.1%). The main focal point was on the employment data with Non-Farm Employment Change printing at -92K (exp +58K and the Unemployment Rate creeping up to 4.4% (exp 4.3%) which shows that the US jobs market is clearly teetering.

EUR

AUDEUR bucks the trend opening up this morning at 0.6050. Looking to Euro equities, they are continuing to bleed with the DAX and the CAC closing at -0.9% and -0.7% respectively. Late Friday evening had a couple of key data points out of Europe with the Revised GDP q/q missing expectations at +0.2% (exp +0.3%) and Final Employment Change q/q coming in at +0.2% which met expectations. A quiet week ahead data wise with Eurogroup Meetings set to take place and Sentix Investor Confidence to release later this evening.

GBP

AUDGBP opens down at 0.5237 as investors continue to flock to safe havens. The FTSE had a sharp decline, closing at -1.2%. Looking at the economic calendar for the UK, its a bit light to start the week but the second half is a bit busier. Thursday will have BOE Gov Bailey speaking at the Financial Stability Board Payments Summit, in London, and Friday will have GDP m/m.

NZD

AUDNZD opens in the green this morning at 1.1927 as the Kiwi continues to decline in value due to global safe haven demand and energy inflation concerns. A quiet week ahead with nothing major set to release data wise except Manufacturing Sales q/q on Thursday morning