Aussie Dollar Steadies Despite Geopolitical Tensions

AUD

The Aussie Dollar opens flat against the majors to end the week despite the ongoing geopolitical tensions in the Middle East and little to no data on the economic calendar. Asian equities were mixed with the Nikkei +1.4%, Hang Seng -0.7% and the ASX 200 -0.2%. The US and Iran continue to trade missile strikes and tanker traffic in the Strait of Hormuz has come to a near standstill. Locally, no data was released yesterday and today will be much the same. The next key data point for the Aussie will be on the 23rd with the release of our employment data. Looking across Asia, China's Producer Price Index report released yesterday and showed a 4.1% y/y increase in June, which makes it the fastest pace in four years.

USD

AUDUSD comes in flat at a rate of 0.6941 as the greenback is weighed down by the reaction to the release of yesterdays FOMC meeting minutes. The minutes showed that policymakers were concerned about the risks of inflation but opinions were split over the future path of monetary policy, reinforcing expectations of future rate easing. Investors also put aside concerns over the escalating conflict in the Middle East with a retreat for oil and instead focusing on signs that the AI investment boom remains intact. On Wall Street, the Nasdaq ended +1.3%, S&P +0.8% and the Dow Jones +0.3%. US Unemployment Claims released overnight and fell to 215K, missing expectations of 218k. This did little to boost the USD as it was outweighed by geopolitical risks and the Fed's policy outlook. No major data expected to close out the week.

EUR

AUDEUR showed little movement overnight to open at 0.6071, following the release of the ECB's Monetary Policy Meeting Accounts last night. The ECB revealed that there are now growing concerns over sticky, upside inflation risks driven by the energy shock from the war in Iran. European equities closed in the green with the DAX and CAC both up +0.9%. Some minor data out today with German and French Final CPI m/m, and are forecasted at -0.3% and -0.2% respectively.

GBP

AUDGBP opens flat this morning at 0.5175 after a quiet week data-wise for the pair. UK equities finished a touch lower, with the FTSE down -0.2%. Although easing political uncertainty in the UK has limited its downside, risk sentiment souring due to tensions in the Middle East has created safe-haven demand. No major releases to close out the week for the Pound.

NZD

AUDNZD opens down at 1.2057 and continues to fall following the RBNZ decision to hike rates earlier this week. Markets are now pricing in a 74% chance the Reserve Bank of New Zealand tightens rates again in September. No releases today for New Zealand as they will be observing a Bank Holiday to celebrate Matariki.