AUD Softens as US-Iran Conflict Intensifies
AUD
The Aussie Dollar starts the week lower against the majors, after the US strikes Iran for the 8th night in response to US Service members being killed. Asian equities were red into the close, the Nikkei traded -4%, Shenzhen -3.6% and Hang Seng -1.8%. Locally the ASX 200 closed -0.5% as materials and technology sectors led losses of -2.9% and -1.6%. No data out over the weekend for the Aussie as attention shifts to this Thursday’s key employment data. Employment Change is expected to drop from 40.3k to 15.2k and the Unemployment Rate is set to remain at 4.4%. Later this morning we will see Chinese 1-y and 5-y Loan Prime Rates to be released, expected to remain at 3% and 3.5% respectively.
USD
The AUDUSD opens the day lower at a rate of 0.6976, after the pair briefly touched the 0.70 handle early Friday morning. The technology sector weighed on broader sentiment in Friday trade and saw the Nasdaq close -1.4%, the S&P 500 +1.1%, and the Dow Jones -.8%. The Middle Eastern conflict continues to escalate as the United States has attacked an under-construction nuclear power plant in Iran. This comes in retaliation to 3 US service members being killed in Iranian strikes in Jordan. Prelim UoM was released over the weekend, with the Consumer sentiment lifting to 54.4 from 49.5, whilst inflation expectations dropped to 4.2% from 4.6%. Looking forward it is a very quiet week data wise, with Unemployment Claims on Thursday, with all eyes on the Middle-East to see if this escalation grows.
EUR
The AUDEUR sees a small drop, with the pair keeping stable into the close of the week, opening this morning at a rate of 0.6105. European equities finished the day down, with the DAX down -0.3% and the CAC down -0.5%. Friday saw Final CPI data come out unchanged, with Final CPI y/y remaining at 2.8% and Core CPI y/y remaining at 2.4%. Today will see German PPI m/m set to be released, expected to drop to -0.2% from 0.3%, with all eyes on Thursday night’s rate decision, currently expected to hold at 2.40%.
GBP
The AUDGBP opens the day flat at a rate of 0.5189. British equities finish up soft, with the FTSE closing up +0.3%. There was no data out from Friday, with this morning having the Rightmove HPI m/m coming in lower at -1% from -0.6%. Tomorrow afternoon will see the release of some key UK employment data, with Claimant Count Change Expected to soften to 28.3k from 31.2k, and Average Earnings Index 3m/y is expected at 4.5% from 4.4%.
NZD
The AUDNZD sees a mild slide since Friday opening this morning at a rate of 1.1953. Trade Balance data was released earlier this morning, seeing a huge miss, coming in at 23M with expectations of 250M from 577M, showing that their export market rose. Early tomorrow morning will see their CPI q/q, expected to show a lift from 0.9% to 1.5%, which is inline with RBNZ’s forecast.