AUD Slides as Negotiations Halted Between US-Iran
AUD
The Aussie Dollar opens mixed this morning after reports that Iran has halted communications with the US following the ongoing Israeli military operations in Lebanon. They have stated that talks would not continue until Israeli forces withdrew, which put some downward pressure on the risk sensitive AUD. Asian equities finished mixed yesterday with the Nikkei and Hang Seng both trading +0.9% each while the Shenzhen closed -1%. Locally the ASX 200 closed relatively unchanged, despite technology gaining +5.4%. Yesterday, the MI Inflation Gauge m/m released and fell -0.3% in May, reversing a +0.6% increase in the previous month and marking the first decline since February. ANZ Job Advertisements m/m also released yesterday at +1.8% in May, following a -3.7% fall over the prior two months. Later this morning the Australian Current Account is expected to print at -23.1B (previously -21.1B).
USD
AUDUSD drops off slightly this morning at a rate of 0.7161 following stronger than expected manufacturing data and contradictory comments from the US and Iran regarding ongoing negotiations. Earlier this morning President Trump claimed that Israel would be withdrawing troops from Beirut and that Hezbollah had also agreed to stop fighting, while Netanyahu claims he told Trump that Israeli forces will "continue to operate as planned in southern Lebanon". Wall St. ultimately closed slightly higher to start the week with the Nasdaq +0.4%, the S&P 500 +0.2%, and the Dow Jones +0.1%. U.S.10-year yields rose 1bp to 4.45%, while Brent Crude rose 4.5% to $95.20 a barrel. US Manufacturing PMI rose to 54 in May from 52.7 in April, surpassing market expectations of 53.3 and signals growth in the US manufacturing sector. Friday's US Nonfarm Payrolls report will be the focus this week for clues on the Fed's next policy moves.
EUR
AUDEUR opens flat this morning at 0.6155 following mixed economic data out of the Eurozone. European equities closed lower with the CAC and DAX both down -0.4%. Yesterday saw the Unemployment Rate creep up to 6.3% from 6.2% and Final Manufacturing PMI data releasing at 51.6 (expected 51.4), signaling a partial reversal of the strength witnessed in April when new orders rose at the fastest pace in four years. Eurozone inflation data for May will be out later today and is expected to increase to 2.4% y/y from 2.2% y/y. A strong inflation print could see the ECB hike rates by 25bp at its June 11 meeting.
GBP
AUDGBP opens in the red at 0.5321 as no first-tier United Kingdom data on the docket this week leaves the currency at the whims of global risk sentiment and geopolitical headlines. UK equities also closed down with the FTSE at -0.7%. A quiet calendar for the rest of the week data wise with the only points of note being BOE Governor Andrew Bailey speaking twice this week in London.
NZD
AUDNZD recovers slightly to open at a rate of 1.2067 this morning following a Bank Holiday in New Zealand to celebrate King's Birthday. The rest of the week looks bare data wise for New Zealand, with the major data piece for this month being GDP q/q on June 18th.