AUD Gains Momentum as Downside Risks Ease

AUD

The Australian Dollar opens largely higher this morning against the majors after risk sentiment improved due to Iran war de-escalation hopes. Asian equites were mixed in trade yesterday as President Trump signaled a willingness to end the U.S. military campaign against Iran even if the Strait of Hormuz remained closed. The Hang Seng traded +0.1%, Nikkei -1.6% and Shenzhen -0.9%. Locally the ASX 200 ended higher by +0.25% as technology and communication services sectors outperformed at +3% and +0.8% respectively. RBA meeting minutes yesterday showed that the majority view of the RBA is that financial conditions must remain restrictive to combat persistent inflation. Looking at local news, there will be some minor data released later this morning with Building Approvals m/m, and Commodity Prices y/y followed by Goods Trade Balance tomorrow at 11:30 which will end the week for Aussie news.

USD

AUDUSD opens higher this morning at 0.6899 after the US Dollar fell on hopes that the U.S.-Israeli war with Iran may not last as long as some feared, though it remained on track for its best quarter since the third quarter of 2024. US President Donald Trump told aides yesterday he is willing to end the military campaign against Iran even if the crucial Strait of Hormuz shipping artery remains largely closed. US Jolts Job Openings came through overnight slightly below forecast but was still within the range so with minimal reactions in the market.. Wall St. rallied hard with the Nasdaq trading +3.8%, the S&P 500 +2.8%, and the Dow Jones +2.4% entering the final hour of trade. Out of the US today we have the US Retail Sales m/m for February, which is scheduled for release later tonight and will provide an update on the health of the consumer. Headline sales contracted on a MoM basis in January, driven largely by declines in auto and gasoline sales. Despite this weakness, core retail sales remained firm, posting its fourth consecutive monthly increase. The US ISM Manufacturing Index for March is also due for release, with the headline reading expected to ease slightly to 52.1 from 52.4 in February. Despite the modest pullback, the index would remain firmly in expansionary territory, marking a third consecutive month above the 50 thresholds after spending the prior eight months in contraction.

EUR

AUDEUR traded mostly sideways overnight opening flat at 0.5972, despite Eurozone Core CPI Flash Estimate y/y, CPI Flash Estimate y/y and also Italian Prelim CPI m/m all missing forecasts. Eurozone equities closed in the green with the DAX +0.5%, and the CAC +0.6%. Looking at news the Eurozone will release its Unemployment Rate for February tonight. Macquarie Strategy expect a steady reading at the cyclical and multi-decade low of 6.1%, which would suggest the labour market remained tight ahead of the Middle East conflict and energy supply shock. There will be also some Final Manufacturing PMI’s for the Eurozone tonight, however there is no reaction expected from the market. 

GBP

AUDGBP regains its 0.52 handle after jumping up overnight due to improved risk sentiment opening at 0.5218. Yesterday the UK released its Current Account, Final GDP q/q, Nationwide HPI m/m, and Revised Business Investment q/q which all came through better or in line with forecasts, however there were no reactions in the market. UK equities also closed in the green with the FTSE up +0.5%. Later this evening we will get the release of Final Manufacturing PMI, FPC Meeting Minutes, and the FPC Statement.

NZD

AUDNZD opens higher this morning at 1.2005 riding off improved risk sentiment. Earlier this morning our Kiwi neighbours released their Building Consents m/m which came through at 2.7% from the previous 2.0%. That will be the last piece of data for NZD for this short week.