AUD Slides Amid Tech Selloff and Surging Oil Prices

AUD

The Aussie Dollar opens the session weaker against the majors, heavily driven by broad US Dollar strength as Fed rate-hike bets surge past 90%, compounded by a global risk-off tone after tech leaders called for a slowdown in AI development which caused a fall in technology shares. Asian equities were mixed yesterday with the Hang Seng +0.5%, Nikkei -.8% and Shenzhen -.7%. Locally the ASX 200 ticked .1% higher, as healthcare and consumer staples sectors led gains at +1.5% and +0.6% respectively. Today is a massive day for regional risk, with China’s August industrial production, retail sales, and fixed-asset investment data dropping at 12:00pm AEST. The consensus looks for Industrial Production to pick up to 4.8% YoY from 4.5%, and for Retail Sales to rise to 0.8% from 0.6%. On Friday, RBA Gov Bullock will speak which may reveal subtle clues regarding future monetary policy.

USD

The AUD/USD opens at 0.7140, dropping sharply from late last week to hit fresh multi-week lows. The Greenback is flexing its muscle across all major pairs, bolstered by surging US 10-year Treasury yields topping 5% for the first time since 2023, and a more than 90% probability now priced in for a Fed hike at this Thursday morning's FOMC meeting. US stocks closed in the red as risk sentiment soured globally, with the S&P 500 falling -0.5%, the Dow down -0.3%, and the tech-heavy Nasdaq leading the losses at -0.6%. Tonight, the US Empire State Manufacturing Index will be released, currently forecasted at 14.8 from a previous 20.6. Looking ahead to tomorrow night, US Retail Sales and Import Prices will provide the final key data points before Thursday morning's highly anticipated Fed rate decision.

EUR

The AUD/EUR opens this morning flat at 0.6178, however, this downward movement is almost entirely driven by broader Aussie Dollar weakness rather than Euro strength. The Euro itself remains relatively unchanged, allowing the cross to hold up much better than the AUD/USD pair. European equity markets remained mixed into the close, with Germany's DAX shedding -0.5% and France's CAC sliding -0.8%. The European Central Bank's next Governing Council meeting isn't scheduled until late October, leaving the Euro to trade primarily on broader global risk sentiment and US Dollar dynamics this week.

GBP

The AUD/GBP opens slightly down on the session at 0.5285. The UK's FTSE 100 bucked the negative European trend, ending the session +0.4% higher. Later this afternoon will see the release of some key UK employment figures with Claimant Count Change, Average Earnings Index 3m/y and the Unemployment Rate, with forecasts suggesting the labour market to take a hit. Market attention is now firmly fixed on Thursday night's Bank of England MPC rate decision, keeping the Pound active as investors weigh the possibility of a volatile "double hike" week alongside the US Fed and BoJ

NZD

The AUD/NZD opens higher at 1.2357 this morning. The primary driver for the cross this week will be today's Chinese economic data dump (which heavily impacts both commodity currencies) and the broader global reaction to Thursday's major central bank meetings. Some minor data out for New Zealand tomorrow, with GDT Price Index, Westpac Consumer Sentiment and Current Account set for release.