AUD Maintains Gains Ahead of US-Iran Peace Talks

AUD

The AUD opens higher against the major currencies as markets pivot to a risk-on attitude following the tentative ceasefire in the Middle East. Asian equities ended lower yesterday as Tehran warned that some terms of the US-Iran ceasefire deal had been breached. The Nikkei traded -0.7%, Shenzhen -0.6% and the Hang Seng -0.5%. Locally the ASX 200 finished higher +0.2% as energy and utilities sectors outperformed at +2.6% and +1.9%. No data for Australia today, but across Asia we will see Chinese CPI y/y (exp. 1.2%) and Chinese PPI y/y (exp. 0.4%).

USD

The AUDUSD opens at 0.7080, as markets moved from the USD to riskier assets due to the US-Iran ceasefire. Another positive session on Wall St. saw the Nasdaq close +.8%, the Dow Jones +.6%, and the S&P 500 +.5%. U.S.10-year yields fell 2bps to 4.27%, while Brent Crude rose 2% to $96.60 a barrel. Yesterday had US Core PCE Price Index release at 0.4% (exp 0.4%) and Final GDP 0.5% (exp. 0.7%). Markets seem to be more focused on the geopolitical mood shift than government shutdown delayed inflation data from February, which does not currently include the impact of the Iran conflict on energy prices. Tonight will see Core CPI m/m (exp. 0.3%), CPI m/m (exp. +1.0%) and CPI y/y (exp. +3.4%). The US and Iran will have further peace talks in Islamabad this weekend, with markets currently hoping for a final solution in the Middle East and Strait of Hormuz.

EUR

The AUDEUR opens at 0.6054, trading between 0.6019 and current levels throughout last night. European equities came in slightly down with the DAX closing -1.1% and CAC -0.2%. Yesterday had minor German economic figures, however the biggest news was speculation that energy prices in Europe could fall to pre-war levels. No news today from Europe, with the next major data piece being Manufacturing and Services PMIs on 23rd April.

GBP

The AUDGBP opens at 0.5271, increasing by 0.6% from yesterday’s lows of 0.5241. No economic data released out of England yesterday due to the recent Easter break. The FTSE closed -0.1% last night also. No major events from England until Tuesday night; BOE Governor Bailey will speak at Columbia University to discuss the future of central banking. 

NZD

The AUDNZD opens at 1.2089. Following a hawkish tone from the RBNZ earlier this week, markets now imply around a 30% chance that the RBNZ will lift its 2.25% cash rate by 25 basis points in May, rising to an 86% probability by July. This morning had BusinessNZ Manufacturing Index release at 53.2, slightly down from the previous reading of 54.8. Monday morning will have BusinessNZ Services Index.