Hawkish RBA and Geopolitical Tensions Cap Aussie Dollar

AUD

The Aussie Dollar opens this morning flat after trading sideways for a majority of the week. Geopolitical uncertainty in the Middle East has sustained demand for safe-haven assets which has limited the upside of the Aussie Dollar. Asian equities finished mixed yesterday with the Nikkei +1.2%, Shenzhen -0.6% and the Hang Seng -0.2%. The ASX 200 closed -0.2% as communication services and materials sectors underperformed at -2.3% and -0.7% respectively. A quiet day yesterday and today in terms of data releases, however later this morning RBA Gov Bullock is due to testify on the RBA Annual Report before the House of Representatives Standing Committee on Economics, in Canberra. Looking to next week, the main focus point will be next Thursday when our key employment data is set to release.

USD

AUDUSD opens flat at a rate of 0.7060 as cooling US inflation data reduces expectations of a September rate hike and US-Iran tensions cap the pair. Another quiet but positive session on Wall St. saw the Nasdaq close +0.8%, the S&P 500 +0.7%, and the Dow Jones +0.1%. U.S. 10-year yields fell 5bps to 4.65%, while Brent Crude fell 2.3% to $86.95/barrel. U.S. PPI for July printed flat MoM and +4.7% YoY with both numbers short of expectations by 0.2% though the core measures were a little mixed. Also released was US Unemployment Claims which rose to 209k against expectations of 202k. Geopolitically, both the US and Iran have publicly claimed full control over the Strait of Hormuz and US defence chief Pete Hegseth says that the US military can maintain its blockade on Iran “indefinitely”. Later tonight, US retail sales data for July is scheduled for release, with both headline and core sales expected to rise by +0.3% MoM.

EUR

AUDEUR opens flat at 0.6123 following a rather uneventful week data wise. European equities closed in the red with the DAX and CAC coming in at -0.1% and -0.3% respectively. A slightly busier day data wise for the Eurozone with Flash GDP q/q, Flash Employment Change q/q and Trade Balance set for release. 

GBP

AUDGBP also opens flat this morning at a rate of 0.5235 following a flurry of releases yesterday afternoon. UK equities closed the session in the red with the FTSE down -0.6%. Q2 GDP came in as expected at 0.4% q/q and 1.2% y/y (Est. +1.1%). June Industrial Production printed lower than market expectations at -0.2% (Est. 0.1%). Looking to next week the main focus points for the UK will be Claimant Count Change on Tuesday and CPI y/y on Wednesday. 

NZD

AUDNZD opens in the green at 1.2068, hovering around two week highs. Earlier this morning BusinessNZ Manufacturing Index released at 54.3 from a previous 60.1 and Visitor Arrivals m/m saw a slight decline of -0.1% from a previous -2.4%.