AUD Flatlines as US-Iran Escalations Continue
AUD
The Aussie Dollar opens broadly flat across the major currencies this morning as global markets react to growing uncertainty over the future of the U.S.-Iran peace deal. Asian equities ended mixed yesterday with the Hang Seng +3%, Nikkei -2.1%, and Shenzhen -0.7%. Locally, the ASX 200 shed 0.2% as communication services and materials sectors led losses at -2.1% and -2%. The Aussie’s recent upward momentum has halted as the Iran deal is put in question following fresh U.S. military strikes and a sharp surge in oil prices. In China, inflation data will be released today, with CPI y/y expected at 1.1%, easing from 1.2%. With a completely bare domestic economic calendar today, the local currency remains entirely dependent on international geopolitical developments.
USD
The AUDUSD pair opened flat this morning at 0.6931, holding steady as markets watch the Middle East. Escalation of the conflict between the US and Iran has caused sentiment to sour, with the Vix volatility index stepping higher for the second session and oil firmer. On Wall Street, the Dow was down 1% although small gains for the Nasdaq whilst currencies were relatively subdued. On the data front, the newly released FOMC minutes showed a central bank deeply split on its next rate move, with the June dot grid printing nine hikes against eight holds and one lonely cut. Later tonight, US Unemployment Claims are set to release and are currently expected to print at 218k from a previous 215k. pointed to a steady labor market.
EUR
The AUDEUR pair opened flat this morning at 0.6070, showing little net movement as global focus remains on the Middle East. European equity markets took a hit overnight, with Germany's DAX and France's CAC both tumbling -2.2% as surging oil prices renewed inflation worries. Looking ahead, there is no major European economic data scheduled for the next week, meaning Euro movements will be heavily driven by global tensions and international news.
GBP
The AUDGBP pair opened slightly down this morning at 0.5176. Like mainland Europe, London's benchmark FTSE slumped -1.7% as global trading desks reacted to the Middle East ceasefire breakdown by aggressively scaling back near-term rate cut expectations from the Bank of England. Political tensions remain high with the UK still lacking a new leader, while Nigel Farage’s announcement that he will resign as an MP to contest the upcoming by-election has added to the local instability. Ultimately, the near-term direction for the Pound will be guided by interest rate differentials and global politics rather than these domestic factors.
NZD
The AUDNZD pair opened lower this morning at 1.2153. Yesterday, the Reserve Bank of New Zealand moved in line with broader market expectations by raising its Official Cash Rate by 25 basis points to 2.5%. However, the decision was widely labeled by economists as a "dovish hike," which quickly capped any sustained post-decision upside for the Kiwi. With the high-profile rate decision now cleared and a scheduled New Zealand bank holiday tomorrow, the market will look forward to economic movements around the world.