AUD Strengthens on RBA Rate Hike Expectations

AUD

AUD opens up against the majors with fresh near 4-year highs on the USD off the back of President Trumps announcement to escort ships stuck in the Strait of Hormuz. In Asia, the Nikkei finished the week +0.4%, while the Hang Seng and Shenzhen indexes were closed for the Labour Day Public Holiday. Locally the ASX 200 ended +0.7% as materials and industrials sectors outperformed at +2.1% and +1.3% respectively. Chinese and Japanese Public Holidays today mean there will be no data out of Asia. Locally quiet with all eyes on tomorrows RBA Cash Rate decision, where the RBA is expected to hike rates twenty-five basis points to 4.35% off the back of last week’s high inflation reading.

USD

AUDUSD opens in the green, touching near four-year highs to open at 0.7214 due to a risk rally following headlines of a ceasefire proposal sent to the US. Wall St. was mixed on Friday with the Nasdaq closing +0.9%, the S&P 500 +0.3%, whilst the Dow Jones fell 0.3%. U.S.10-year yields also fell slightly to 4.37%, and Brent Crude declined 4% to $108.10 a barrel. ISM Manufacturing PMI missed forecasts at 52.7 and ISM Manufacturing Prices over achieved at 84.6. A quiet start to the week for economic data as all eyes will be on Trumps next moves in the Middle East. ISM Services PMI and JOLTS Job Openings will be the next major data release on Wednesday and are expected at 53.8 and 6.87m respectively.

EUR

AUDEUR opens in the green flirting with the 0.6150 barrier at 0.6146. European equities were closed on Friday due to the Labour Day Holiday. Later this evening the eurozone final manufacturing PMIs are set to release and are expected to come out mixed. Tomorrow night, ECB President Lagarde is due to speak at the Climate, Nature and Price Stability Conference, in Frankfurt and may provide some commentary after the ECB held interest rates last week. Looking ahead there will be no major economic data scheduled this week.

GBP

AUDGBP opens back above the 53 handle at 0.5307, the FTSE closed in the red slightly down -0.1%. Similarly to the EU, the BoE held rates last week and don’t have any scheduled data until Friday’s speech from Gov Bailey’s about global imbalances at the Bank of England Agenda for Research Conference. Today will also be a Bank Holiday for the UK in observance of May Day.

NZD

AUDNZD opens in the green crossing the 1.22 mark to open at 1.2214. A quiet weekend and start to the week for the Kiwi, with Wednesdays Employment Change q/q and Unemployment Rate being the key data points this week, expected at 0.3% and 5.4% respectively, with no further major points laid out this week.