AUD Tumbles Following US Fed Bets and Tech Selloff
AUD
The Aussie Dollar opens significantly lower against the major currencies, as markets readjust expected future interest rates around the world and concerns about overvalued AI stocks spark a global tech sell-off. Asian equities took a sharp hit, with the ASX -0.3%, Shanghai Comp -1.4% and Nikkei -3.5%. Commodities were down overall as well, with Copper -3.4%, Wheat -1.7% and Oil -0.9%. Australia were previously expected to raise interest rates – while the other major economies would cut, which in turn made the AUD more attractive to investors. Yesterday, Australia's PMI data released and showed that Manufacturing rose to 51.2 in June versus 50.7 prior and Services climbed to 49.9 in June from the previous reading of 48.7. Today will have Australian CPI m/m, expected to print at -0.4%. This would be our first month with negative inflation since July 2020. Tomorrow will also see Australian employment figures, with our employment change expected to be at +31.2K and out unemployment rate to reduce to 4.4%.
USD
The AUDUSD opens close to 3 month lows this morning at a rate of 0.6914 as the USD strengthened due to market concerns over interest rate hikes out of the US Federal Reserve later this year. Market expectations have inverted over the past few weeks; they were previously expected to cut interest rates around this time, but markets are now pricing in a 85% chance of the Federal Reserve lifting interest rates by September. A route in US tech giants fuelled a Wall St. selloff with the Nasdaq -2.2%, S&P 500 -1.4% and the Dow -0.1%. Yesterday had Flash Manufacturing PMI and Flash Services PMI out of America, releasing at 55.7 and 51.3 respectively. No major data out of America tonight, with the main focus of the week being Core PCE Price Index and Final GDP q/q expected to release tomorrow evening.
EUR
The AUDEUR opens at 0.6073, falling almost 1% from yesterday’s highs of 0.6129 following the 'risk off' mood from the tech sell-off that strengthened the US Dollar. Yesterday saw the monthly flurry of European Manufacturing and Services PMIs, with mixed results. European equities dropped as well, with the DAX -1.0% and CAC -0.7%. No major economic data out of the Eurozone for the rest of the week.
GBP
The AUDGBP opens at 0.5237, falling from this week’s highs of 0.5316. Yesterday saw PM Keir Starmer’s resignation, with a fierce leadership battle expected for his replacement and marking England’s seventh Prime Minister in ten years. Yesterday saw English Manufacturing and Services PMIs release below expectations, at 53.1 and 48.7 respectively. No more major data expected out of England to finish the week.
NZD
The AUDNZD opens at 1.2205, dropping 0.5% as the US Dollar hits its strongest point in 13 months which caused ripples around other global currencies. No data this week, as the AUDNZD hovers near 13-year highs.