AUD Buoyant as Trump-Xi Summit Approaches

AUD

The Aussie Dollar opens slightly higher against the major currencies in the wake of last nights Federal Budget release. Commodities continued to surge upwards, with the highest movers being Wheat +7.7%, Oil +4.4%, Copper +2.9% and Silver +2.4%. Asian equities dropped slightly, with the ASX -0.4%, Shanghai Comp -0.2% and Nikkei +0.5%. Yesterday, saw the Australian Federal Budget announced and was framed around responding to the global oil shock from the Iran conflict and easing cost-of-living pressures, however there were no changes that affected our FX markets. Today will see our Wage Price Index q/q, which is expected to print at 0.8% and will be the key gauge of domestic inflation pressure.

USD

AUDUSD opens at 0.7242 this morning, as the currency pair traded sideways between 0.7200 and 0.7260 due to markets balancing US inflation data and optimism over the end of the US-Iran War. Wall St. saw a mixed performance with the Nasdaq closing -0.7%, the S&P 500 -0.2% and the Dow Jones +0.1%. U.S.10-year yields rose 5bps to 4.46%, while Brent Crude rose 3.4% to $107.70 a barrel. Yesterday saw US inflation figures print higher than expected, with Core CPI m/m (0.4% vs. exp 0.3%), CPI m/m (0.6% vs. exp 0.6%) and CPI y/y (3.8% vs. exp. 3.7%). The hotter-than-expected inflation reading is likely to cause the Fed to keep an eye on higher energy costs creeping into other prices, a red line that, if crossed, could raise the possibility of interest rate hikes. Tonight will see Core PPI m/m (exp. 0.3%) and PPI m/m (exp. 0.5%), as well as the Fed Chair Nomination Vote for Kevin Warsh.

EUR

The AUDEUR opens higher at 0.6167, with the currency pair falling to 0.6137 before rising to current levels. European equities fell overnight, with the DAX -1.6% and CAC -0.9%. ZEW Economic Sentiment released yesterday at -9.1 (expected -21.6). While sentiment is improving, it is still in negative territory. Today will see the release of Flash GDP q/q, Flash Employment Change q/q and Industrial Production m/m.

GBP

The AUDGBP opens at 0.5346, touching 2.5-year highs of 0.5355 last night. British equities closed flat last night, with the FTSE at 0.0%. This week so far has had no economic data of note, however tomorrow afternoon will have GDP m/m (exp. -0.1%), Prelim GDP q/q (exp 0.6%). All eyes remain on the ongoing leadership situation as UK Prime Minister Keir Starmer is defying calls from a growing number of Labour MPs for him to quit as British prime minister.

NZD

The AUDNZD opens at 1.2161, trading between 1.2136 and 1.2178. Some minor data out of New Zealand today with Inflation Expectations q/q. Visitor Arrivals m/m set to release tomorrow.