AUD Posts Muted Gains Following RBA Rate Hike
AUD
The AUD opens higher against the major currencies, as markets regathered some certainty over ceasefire reaffirmations in the Middle East. Yesterday saw strikes against Iranian boats and an American warship, as tensions flared over the current blockade in the Strait of Hormuz. The RBA raised the Aussie Cash Rate to 4.35%, citing headline inflation of 4.8% y/y but also mentioned that our current interest rates were “well placed to respond to developments” simmering expectations of another hike at the next RBA meeting slightly. Asian equities were slightly up, with the ASX -0.2%, Shanghai Comp +0.1% and Nikkei +0.4%. Commodities continue to be volatile, with the largest movers being Oil -3.6%, Natural Gas +2.7% and Copper +2.3%. No major economic data due to be released out of Australia and Asia for the rest of the week, with the next data piece being Chinese inflation numbers on Monday. Japan will be observing a bank holiday today and will be back from a long hiatus tomorrow.
USD
The AUDUSD opens at 0.7205, falling as low as 0.7136 yesterday before rising to current levels due to changes in risk sentiment. The US had announced “Operation Epic Fury” – an attempt to allow the safe passage of oil by escorting ships through the Strait of Hormuz. The first attempt had led to the strikes, however this has since been paused as President Trump announced they are looking to finalise a peace deal with Iran. Wall St. rebounded overnight following headlines that the ceasefire remained in place despite some strikes near Iran. The Nasdaq closed +1.1%, the S&P 500 +0.8%, and the Dow Jones +0.7%. U.S.10-year yields fell 1bp to 4.42%, while Brent Crude fell 3.8% to $110 a barrel. ISM Services PMI and JOLTS Job Openings were released yesterday, meeting expectations of 53.6 and 6.87M respectively. No more economic news out of the US until Friday night, with employment and wage data released.
EUR
The AUDEUR opens higher at 0.6145, after dropping to 0.6108 before rebounding overnight due to developing risk sentiment improvement. European equities also rebounded, with the DAX closing +1.7% and CAC +1.1%. Yesterday, ECB President Legarde spoke at the Climate, Nature and Price Stability Conference, however nothing of note was mentioned. It will be a quiet next few weeks out of Europe, with most of the volatility of the AUDEUR arising from AUD movement.
GBP
The AUDGBP opens a touch higher at 0.5308 this morning. British equities took a hit, with the FTSE closing -1.4%. No news out of England so far this week with the next economic data piece being BOE Governor Bailey speaking on Friday night at the Bank of England Agenda for Research Conference.
NZD
The AUDNZD opens lower at 1.2191, trading between the range of 1.2159 and 1.2220 yesterday. This morning saw Employment Change q/q (0.2% vs. expectations of 0.3%) and Unemployment Rate (5.3% vs. expectations of 5.4%) which showed some easing after reaching a decade high Unemployment Rate. Later this morning RBNZ Gov Breman will be holding an online press conference about the Financial Stability Report that was posted earlier this morning.