Aussie Dollar Weakens as Middle East Tensions Reignite

AUD

The AUD opens mixed against the major currencies, as markets reassess global risk factors and supply chain disruptions following fresh escalations in the Middle East. No major economic data was released over the weekend, with equities seeing a slight retrace; the ASX closed -0.1%, Shanghai Comp +0.1% and Nikkei -1.8%. Commodities were also down and continue to be volatile, with Oil -10.1%, Natural Gas -6.9% and Silver +3.4%. Today will continue to see no economic data out of Australia, although Chinese interest rates will be decided at 11am (no changes expected). The week ahead is looking quiet for the Australian economic data calendar with a majority of the volatility expected to arise from developments in the Middle East conflict. 

USD

The AUDUSD opens lower at 0.7140, reaching 46-month highs of 0.7223 on Friday night on the news that the Strait of Hormuz had reopened before gapping down to current levels this morning after its immediate reclosure. President Trump and FOMC Waller spoke at their respective events on Friday night, however the key news was escalations in the Middle East. A US warship opened fire on an Iran-flagged tanker and the Strait of Hormuz in now effectively closed again. On Wall St. the Dow Jones closed +1.7%, the Nasdaq +1.5%, and the S&P 500 +1.2%. U.S.10-year yields fell 6bps to 4.25%, while Brent Crude fell 8% and closed at $91.55 a barrel. No economic news today out of America, with Retail Sales data being released tomorrow night.

EUR

The AUDEUR opens slightly lower at 0.6083, as the currency traded between 0.6059 and 0.6100 over the weekend. Europe and Australia have both felt the pressure due to their lack of oil refineries, with the AUDEUR pair currently at the whims of market views. European equities did see a large boost on Friday night, with the DAX +2.3% and CAC +2.0%. Tonight has some minor European economic data, as well as ECB President Lagarde speaking at the Association of German Banks Annual Reception. 

GBP

The AUDGBP opens flat at 0.5295, trading in a range of 0.5278 and 0.5316 over the weekend. England has struggled with the supply chain shock as their lack of oil has caused business and consumer costs to grow. The FTSE closed slightly higher at +0.7% from open. No news today, as the next major data pieces to release are; UK Claimant Count Change, Unemployment Rate and Average Earnings Index 3m/y at 4PM tomorrow.  

NZD

The AUDNZD opens at 1.2174, as the pair traded sideways over the weekend. No news over the weekend, although tomorrow morning will have CPI q/q numbers, currently forecasted at +0.8% (prev +0.6%).