Aussie Dollar Tumbles as Risk Sentiment Sours
AUD
The Aussie Dollar opens down against the major currencies, as risk sentiment soured over the weekend due to renewed tensions in the Middle East, as well as a global equity sell-off. Asian equities were hit the hardest of the major stock exchanges, with the ASX -0.7%, Shanghai Comp -1.7% and Nikkei -3.8%. Commodities closed higher, with the major movers being Natural Gas +3.8%, Coal +1.9% and Oil +0.8%. No major economic data was released over the long weekend, with the main driver of currency markets being equities and Middle Eastern headlines. Some minor data out later this morning with the Westpac Consumer Sentiment and NAB Business Confidence surveys set to release. In China, trade data for May will be released today and is currently forecasted at 625B, previously 586B. The rest of the week will be quiet data wise as markets shift their attention to next Tuesday when the RBA will meet to decide the Cash Rate.
USD
The AUDUSD opens down at 0.7045, hovering around a two month low over the weekend as uncertainty crept into the US economy and Iran and Israel traded air strikes. On Friday, America’s latest jobs report was released, with 172K jobs created vs. expectations of 85K. As a result, markets are now pricing in a 70% chance of a US Federal Reserve interest rate hike by December. The cascading effects have led to an expectation that business conditions will tighten, combined with the conflict in the Middle East continuing indefinitely, risk sentiment has soured. Wall Street was mixed on Monday, with Dow Jones -0.2%, S&P500 +0.3%, Nasdaq +0.9%. No more economic news today, however tomorrow night will see US monthly inflation figures released.
EUR
The AUDEUR opens lower at 0.6108, as the currency pair fell over the long weekend due to worsening risk sentiment. European equities fell last night, with the DAX closing -0.6% and CAC -0.2%. No major economic news out of Europe the past few days outside of the OPEC-JMMC Meetings. The next major data event will be the ECB interest rate decision on Thursday, with markets expecting a rate hike to 2.40% from 2.15%.
GBP
The AUDGBP opens lower at 0.5280, falling to lows of 0.5262 before settling to current levels. British equities were flat, with the FTSE closing +0.0%. BOE Gov Bailey spoke on Saturday morning at the Adam Smith Global Foundation regarding the global economy, however nothing of note was mentioned. No major news to be announced until Friday afternoon, with the GDP m/m expected to be released at -0.1%.
NZD
The AUDNZD opens down at 1.2129, having seen a recovery from the initial drop below 1.20 last week. The drop happened due to unexpected news that the RBNZ had considered a hike in their last interest rate decision. No major news out of New Zealand until Thursday 18th June, with their GDP q/q figures.