AUD Rallies to Fresh Highs as Peace Optimism Grows

AUD

The Aussie Dollar opens up against the majors and reaches fresh highs, following reports that the US and Iran have moved closer to a deal that would end the conflict. Asian equities closed Wednesday higher across the board with the Shenzhen +1.5%, the Hang Seng +1.2% and the Nikkei +0.4%. The ASX climbed +1.3% driven by 2% gains in materials and financials. The Aussie also received a boost from stronger than expected economic data out of China, with the RatingDog Services PMI coming in at 52.6 (forecasted at 50). Later this morning the Australian Trade Balance figures from March will be released which will show some insight on the effect the conflict in the Middle East has had on international trade. The rest of the week will be quiet data wise for Australia, with the next key release being the Wage Price Index q/q next Wednesday.

USD

AUDUSD opens at 0.7236 after hitting fresh 4 year highs of 0.7250 overnight as investors grow optimistic about a possible end to the Iran war and a sudden jump in the Japanese yen yesterday sparked rumours of further intervention. U.S. equities recorded all-time highs overnight driven by strong corporate earnings. On Wall St. the Nasdaq closed +2%, the S&P 500 +1.4%, and the Dow Jones +1.2%. U.S.10-year yields fell 7bps to 4.35%, while Brent Crude fell 7.7% to $101.40 a barrel. US Secretary of State Marco Rubio confirmed at a press conference that the US had achieved all the objectives of the war and that the offensive phase was over, suggesting that the US is not willing to resume hostilities. Overnight the ADP Non-Farm Employment Change printed at 109k, which was just short of the 120k estimate and had little reaction on the market. Later tonight we will see the US Unemployment Claims data set for release, currently forecasted at 205k (prev 189k).

EUR

AUDEUR opens slightly up at a rate of 0.6158 this morning due to the improvement in risk sentiment. European equities closed positively, with the DAX and CAC at +2.1% and 2.9% respectively. Yesterday, Eurozone Final Services PMI came in at 47.6. The survey data pointed to stagflation in the euro area economy at the start of the second quarter, as the first fall in private sector business activity since December 2024 was accompanied by the sharpest rise in prices charged in three years. Some minor data to close out the week expected, but unlikely to move markets.

GBP

AUDGBP surges to 0.5323 overnight after hitting highs of 0.5336. The FTSE also followed suit closing at +2.1% as equities soar globally. UK Final Services PMI released yesterday at 52.7 (exp. 51.9) and signalled a slightly improved performance in April as business activity growth picked up since the previous month. However, input cost inflation continued to accelerate sharply due to surging fuel prices. Quiet on the economic calendar to end the week, with the main focus on Friday as BOE Gov Bailey is set to speak in a fireside chat about global imbalances at the Bank of England.

NZD

AUDNZD dropped slightly overnight, coming in at 1.2150. Earlier this morning RBNZ Gov Breman testified on the Monetary Policy Statement before the Finance and Expenditure Committee in Wellington. She noted that inflation is likely to rise in coming months.