AUD in Limbo as Safe Haven Demand Increases

AUD

The Australian Dollar opens the morning mixed against the majors as geopolitical tension continues to dominate the market narrative. The US-Iran ceasefire has been extended indefinitely, however the Strait of Hormuz remains closed, with overnight tanker interceptions adding a fresh layer of uncertainty to an already fragile situation. Asian equity markets ended Thursday on the back foot, with the Hang Seng down 1%, the Nikkei off 0.8%, and the Shenzhen down 0.3%. Locally, the ASX 200 closed lower by 0.6%, with materials and consumer staples the underperformers, falling 1% and 0.8% respectively. Looking ahead, the next major data point for the Aussie will be our CPI inflation data which is due to release on Wednesday. This data will show the beginning of the energy shock in March and will be closely monitored.

USD

AUDUSD drops overnight, sitting at 0.7132 as geopolitical tensions have further undermined ceasefire hopes as Iran tightens its grip on the Strait of Hormuz, weighing on global oil shipping. On Wall Street overnight, US equities closed lower with the S&P 500 down 0.4%, the Nasdaq off 0.9% and the Dow down 0.4%, dragged by sharp falls in IBM and ServiceNow following disappointing earnings. US Manufacturing and Services PMI data overnight showed a slight rebound with manufacturing at an almost four-year high of 54 from 52.3 and Services PMI at 51.3, beating forecasts of 50.6. US weekly jobless claims data fell marginally short of expectations with initial claims rising to 214k (210k exp). Looking ahead, the Fed meets next Thursday and are widely expected to hold. Incoming Fed nominee Kevin Warsh struck a notably hawkish tone this week, reinforcing the higher-for-longer narrative. Consumer Confidence is due Tuesday, and Durable Goods Wednesday ahead of the Fed decision.

EUR

AUDEUR is marginally lower this morning at 0.6103, with the Euro underpinned as the economic cost of the iran conflict is hitting major Euro countries like Germany hard. European equities closed mixed overnight, with the CAC finishing up +0.9% while the DAX slipped -0.2%. On the data front, Germany has halved its 2026 GDP growth forecast to just 0.5%, directly citing the Iran conflict and Hormuz closure as the key drivers of rising costs for households and businesses. The ECB is expected to hold in the near term, however markets are now pricing rate hikes for 2026. The IEA this week issued a stark warning, calling the current situation the biggest energy security threat in history for Europe. Eurozone Flash PMIs released yesterday and indicated growth in manufacturing but a sharp decline in services.

GBP

AUDGBP is relatively flat this morning sitting at 0.5296 as the pair continue to trade sideways this week, opting for a wait and see attitude on tensions escalating in the Middle East. The FTSE closed down -0.2% overnight. UK PMI data has been coming in on the positive side, though consumer confidence has dipped lower, reflecting the broader pressure households are feeling. UK Retail Sales m/m for March are due today, with the previous February reading coming in at -0.4%. Also due today is the UK preliminary Services PMI for April, which is expected to ease to 50.0 from 50.5, reinforcing concerns that momentum in the UK’s dominant services sector may be slowing. The Bank of England continues to face a difficult balancing act, with growth forecasts being revised down while inflation remains stubbornly elevated.

NZD

AUDNZD opens in the green this morning at 1.2179. It is a quiet end to the week out of New Zealand with no major data due today. The New Zealand economy remains soft, and the RBNZ comments and inflation forecasts will be the key directional catalysts for the Kiwi in the weeks ahead.