Aussie Dollar Flat as Middle Eastern Hostilities Return

AUD

The Aussie Dollar opens the day largely flat against the majors after renewed hostilities between the US and Iran drag down market confidence. Asian equities were mixed yesterday with the Shenzhen +.4% and the Nikkei and Hang Seng both -.1%. The ASX 200 closed -.2% as materials and technology sectors underperformed at -2% and -1.4% respectively. Some minor local data out yesterday with the MI Inflation Gauge m/m printing at 0.5% from a previous 1.0%. In China, August Manufacturing PMI printed higher than market expectations at 49.8 (Est. 49.5) and Non-Manufacturing PMI came in lower at 49.0 (Est. 49.4). Later this morning the Australian Current Account is set for release and is currently forecasted at -29.7B from a previous -27.1B. The main event on the domestic economic calendar for the week comes tomorrow when we will see the release of our GDP q/q figures, currently forecasted at +0.3%.

USD

AUDUSD traded sideways overnight, opening at a rate of 0.7165 as a jump in energy prices sparked by the Middle East conflict pushed US Treasury yields higher, but not the Greenback. The renewed hostilities keep energy‑driven inflation risks elevated, further reinforcing the case for major central banks to maintain a hawkish stance. On Wall St., the Dow Jones closed -.7%, the S&P 500 -.3%, and the Nasdaq -.2%. No US data to start the week, however the ISM Manufacturing Index for August is due overnight, which is expected to print at 55.2 from a previous 55.6. US job openings data for July will also be released and is expected to shape perceptions of labour market conditions ahead of August’s employment report on Friday. Job openings are expected to fall by 59k, following a larger drop of 178k in the previous month that brought the total number of openings to 7.4 million.

EUR

AUDEUR opens in the red at 0.6168 due to safe haven demand increasing from renewed hostilities in the Middle East. European equities closed poorly, with the DAX and CAC coming in at -1.2% and -0.8% respectively. Yesterday, German headline inflation came in at 2.9% year-on-year in August, from 2.8% YoY in July as a result of energy price base effects. Eurozone CPI for August is due for release tonight, with the headline figure likely to pick up to 3.3% y/y from a previous 2.9%. Eurozone unemployment rate for July is also set for release and looks to remain steady at 6.3%.

GBP

AUDGBP opens the day flat at 0.5289 following a Bank Holiday in the UK yesterday. UK equities closed in the green with the FTSE up +0.3%. No data out yesterday and some minor data out today with BRC Shop Price Index y/y and Final Manufacturing PMI. UK Retails sales released earlier this morning and came in higher than forecasted at 1.5% (exp 0.9%). Final Manufacturing PMI data is also currently forecasted to remain flat at 51.5.

NZD

AUDNZD comes in flat at a rate of 1.2111 as the RBNZ interest rate decision approaches. Some minor data out yesterday with the ANZ Business Confidence survey coming in at 53.7 from a previous 56.1. Big day for the Kiwi tomorrow as the RBNZ is expected to increase rates by 25bps to bring the interest rate up to 2.75%.