Renewed US-Iran Deal Hopes Boost Aussie Dollar

AUD

The Australian Dollar rose overnight against the majors following headlines suggesting that the US and Iran are in ongoing discussions, which boosted hopes of a deal still being reached and lifted overall risk sentiment. Asian equities were mixed in trade yesterday as Iran peace talks failed and the U.S. announced plans for a blockade of the Strait of Hormuz. The Shenzhen finished +0.2%, Hang Seng -0.9% and the Nikkei -0.7%. Locally the ASX 200 was -0.4% as technology and industrial sectors led losses at -1.8% and -1.1%. RBA deputy governor Andrew Hauser is speaking in New York this morning and markets will be paying closer attention than normal after his earlier hawkish remarks on a podcast were a catalyst in the re-pricing of rate hike expectations before the RBA's March meeting. Data wise, today will see the monthly NAB Business Confidence survey and Westpac Consumer Sentiment later this morning. Looking to Asia, traders will be closely monitoring China’s Trade Balance data out today (exp 760B).

USD

AUDUSD rebounded overnight, opening at 0.7101 as the market reassess evolving geopolitical developments in the Middle East and the prospects for a US-Iran deal. Further details of the US blockade of the Strait of Hormuz are now emerging with the US said to be enforcing this from the Oman Gulf or Arabian Sea with President Trump declaring he will eliminate any Iranian ships close to the blockade. A positive session on Wall St. to start the week despite the weekends failure to reach an agreement between U.S. and Iran. The Nasdaq led the way closing +1.2%, while the S&P 500 and the Dow Jones were +1%, and +.6% respectively.  The overnight rise in US equities has now pared all the losses since the beginning of the conflict in Iran. US 10-year yields fell 2bps to 4.3%, while Brent Crude rose 3.2% to $98.30 a barrel. Today, Core PPI m/m and PPI m/m are set to be released and are forecasted to show a rise in headline PPI due to the recent oil price shock.

EUR

AUDEUR opens up at 0.6038 this morning, following a broad increase in risk sentiment overnight. European equities decline slightly, with the DAX and CAC both closing at -0.3%. A quiet day today on the economic calendar, with German WPI m/m being the only data point for the Eurozone. ECB President Lagarde is set to speak early tomorrow morning and the day after and may drop subtle clues regarding future monetary policy. 

GBP

AUDGBP comes in slightly higher at 0.5256. The FTSE closes slightly in the red at -0.2%. A slightly busier day today for the UK with BRC Retail Sales Monitor y/y releasing earlier this morning. The results showed a 3.1% increase in the value of same-store sales at the retail level after previously releasing at 0.7%. Later tonight, BOE Gov Bailey is due to participate in a moderated discussion about the future of central banking at Columbia University in New York.

NZD

AUDNZD continues to trade sideways, coming in at 1.2099. Earlier this morning, NZ Visitor Arrivals m/m released at +1.7% which is a slight increase from last months +1.1%. Looking ahead, RBNZ Gov Breman is due to participate in a panel discussion titled "Central banking for open economies in a changed world" at the Peterson Institute for International Economics Spring Meetings on Thursday morning.