Aussie Dollar Stalls Ahead of Budget Release

AUD

AUD opens reasonably flat against the majors this morning, though it has edged slightly higher against the USD as oil prices rise following President Trump’s rejection of an Iranian peace deal. Asian equities were mixed to start the week with the Nikkei -0.5%, the Shenzhen +1.6%, and the Hang Seng flat. Locally, the ASX lost -0.5% as healthcare tumbled -6.5% on a CSL guidance downgrade. Yesterday, China's April inflation data released and came in hotter than expected. The Consumer Price Index (CPI) rose 0.3% MoM against a 0.1% decline forecast, while the Producer Price Index (PPI) climbed 2.8% YoY versus a 1.5% expectation. All eyes are on the Australian Federal Budget set to be released this evening, which is expected to show a faster pace of fiscal consolidation driven by planned NDIS reforms. Tomorrow, the focus shifts to domestic labour costs with the release of the Wage Price Index q/q.

USD

AUDUSD opens slightly higher at 0.7250 as markets await clarity on US-Iran talks while the Strait of Hormuz remains closed. A surprisingly calm session for U.S. equities, despite comments from President Trump that the Middle East ceasefire was “on life support”. On Wall St. both the S&P 500 and the Dow Jones closed +.2%, while the Nasdaq closed +.1%. U.S.10-year yields rose 5bps to 4.41%, while Brent Crude rose 3% to $104.30 a barrel. Beyond the geopolitical tensions, US-China talks at the end of the week remain a key focus for traders. Tonight, US CPI for April will be released; headline inflation is expected to remain elevated at +0.7% MoM, while core inflation is projected to edge up to +0.3% MoM.

EUR

AUDEUR opens flat at 0.6151. European equities were mixed yesterday with the DAX closing flat and the CAC closing at -0.7%. The Euro remains sensitive to the ongoing energy crisis and the closure of the Strait of Hormuz, with markets actively reacting to the continued volatility of the war. Investors are looking ahead to tomorrow’s flash economic data, specifically the Flash GDP q/q, which will provide the first major look at how the conflict is impacting Eurozone growth.

GBP

AUDGBP opens flat at 0.5327, while the FTSE ended the session +0.4%. British Prime Minister Keir Starmer is under significant pressure following terrible local election results, with three ministerial aides stepping down and over 60 Labour lawmakers calling for his resignation. Despite Starmer reaffirming his intention to remain PM during a press conference, MP Catherine West has announced a challenge for leadership. While political instability dominates headlines, traders are looking ahead to Thursday for a heavy data dump including GDP m/m and Prelim GDP q/q.

NZD

AUDNZD opens slightly lower at 1.2150 as the Kiwi holds its ground in a relatively quiet start to the week for the pair. There is no major economic data scheduled for the remainder of the week, leaving the currency primarily exposed to broader risk sentiment and commodity price swings. Movement will likely be dictated by the market’s reaction to the Australian Budget tonight and the high-impact US inflation figures.