Aussie Dollar Advances After Peace Deal Announcement

AUD

The Aussie Dollar sees a boost to start the week, opening up against the majors following the announcement of a US-Iran peace deal earlier this morning, which would include the reopening of the Strait of Hormuz. Asian equities ended higher on Friday with the Nikkei +2.8%, Hang Seng +1.9% and Shenzhen +1.1%. Locally the ASX 200 gained 2% as materials and consumer discretionary sectors led gains at +4% and +2%. A quiet open to the week for planned economic data locally and out of Asia. Tomorrow, we see the RBA Cash Rate decision which is currently priced in to hold rates steady at 4.35%, with all eyes on the press conference following to see where expectations are for next reading. The Bank of Japan is also meeting tomorrow, with markets currently expecting a 25bps hike to 1.00%, which would take it to a 31-year high and signals its readiness to keep pushing up borrowing costs.

USD

AUDUSD opens in the green at 0.7073 after news this morning that Washington and Tehran have reached a deal to reopen the Strait of Hormuz, with both sides declaring the immediate and permanent termination of military operations on all fronts, including in Lebanon. Another solid session on Wall St. to round out last week saw the Dow Jones close +.7%, the S&P 500 +.5%, and the Nasdaq +.3%. US 10-year yields rose 2bps to 4.49%, while Brent Crude 3.9% to $86.80 a barrel. Over the weekend the UoM Consumer Sentiment released and improved to 48.9 from 44.8 (consensus 46.0), but remains at very weak levels by historical standards. No major economic data scheduled today out of the US, with their next major focus being the Fed Interest Rate Decision on Thursday which will be Kevin Warsh’s first since taking over from Jerome Powell earlier this year. 

EUR

AUDEUR opens slightly up this morning hovering around the 61c mark at 0.6095, as risk sentiment improved following the peace deal announcement. European equities closed in the green after a strong session globally, with the DAX and CAC both up +1.8%. Today, ECB President Legarde is due to deliver opening remarks at a conference hosted by the ECB, in Frankfurt, besides that there is no scheduled currency impacting data for the eurozone this week.

GBP

AUDGBP opens a touch higher at 0.5260 to start the week. UK equities finished strong with the FTSE closing in the green up +1.6%. A quiet open to the week for the UK with the main focus being CPI inflation Data which is set to release 4PM this Wednesday and is currently expected at 3.0% from a previous 2.8%, following that will be employment figures on Thursday.

NZD

AUDNZD opens relatively flat at 1.2085 this morning. Earlier this morning the Business NZ Services Index came in at 47.5, previously 48.7. No major data release are planned until Thursdays GDP q/q, which is expected at 0.8% from 0.2% in the previous reading.