AUD Riding Strong Commodity Prices Higher
AUD
The AUD gaining a bit of momentum to start the week, trading higher across most major currency pairs this morning. Asian Equities were mixed on Monday with the Hang Seng up almost 2% and the Nikkei up 1.6% while the Shanghai Comp closed with no movement (0%). The ASX closed 0.3% lower, down 20.3 points to 7299.9 despite a strong performance from energy stocks and materials thanks to rising oil prices. Australian dollar’s appreciation has been underpinned by a solid rally on commodity prices. Crude oil has hit another multi-year high, with the Crude Oil consolidating above $80, while Iron Ore, one of Australia’s main exports, appreciated amid higher demand from China, as the country's main ports opened following a national holiday. Little local data today with only the NAB business survey on the docket. The survey will continue to be influenced by lockdowns covering roughly half the population. Ai Group’s business surveys for September point to the risk of softer reported business conditions in the NAB survey.
USD
The AUDUSD pair advanced to highs of 0.7372 for the first time since September, before coming back to trade at a rate of 0.7349 at the time of writing. US Equities were softer overnight with the S&P 500 and the Dow Jones falling -0.4% while the NASDAQ fell slightly -0.1%. Oil broke through the $80 mark, gaining 1.4%. On the US data front, the JOLTS Job Openings for August are foreseen at 10.925M. Also, the Atlanta Federal Reserve President Raphael Bostic will cross the wires. In the absence of macroeconomic data, the market has welcomed the relaxation of covid restrictions in the Australia’s NSW, one of the country’s most populated states. The reopening of restaurants, bars and gyms in Sydney after a four-month lockdown has increased bullish momentum on the AUDUSD pair.
EUR
The AUDEUR traded at highs of 0.6368 overnight, three-month highs before coming back to trade at 0.6356 this morning. European Equities were mixed with the CAC slightly up 0.2% while the DAX was flat. Overnight data showed Italian industrial production was just slightly higher, data shows that growth in the Italian industrial production softened slightly in August, after consecutive positive gains of around 1% in June and July. The seasonally adjusted measure was down 0.2% on the month, broadly in line with consensus forecasts. Today, the Eurozone economic docket will feature the ZEW Survey of Economic Sentiment, and at the same time ECB’s Chief Economist Philip R. Lane and ECB’s member Frank Elderson will hit the wires.
GBP
The AUDGBP followed suit to make a gain, trading at a rate of 0.5405 at the time of writing. The London Benchmark FTSE 100 climbed on Monday, helped by heavyweight mining and energy stocks. The FTSE 100 has risen about 10% so far this year, capitalising on easy central bank policies and re-opening optimism, but the pace of gains has slowed recently as investors face cautiousness between rising inflation and interest rate hike prices. BoE Governor Bailey warned earlier on Saturday that ‘Inflation running above the Bank of England's target of 2.0% is concerning and must be managed to prevent it from becoming permanently embedded’. Bailey's comments appeared to favor the more hawkish side of the debate regarding the outlook for interest rates, despite growing signs of a slowing economy. Little in the way of local data on the docket with the UK Unemployment data being of note.
NZD
The AUDNZD pair making highs not seen since July 28th, currently trading at a rate of 1.0592 at the time of writing. Yesterday, the New Zealand government announced that Auckland will remain under Alert Level 3 restrictions for at least another week. The stark contrast between relaxed restrictions in NSW and extended restrictions in NZ will apply pressure on the pairs. Little local data locally will see investors focusing on the local NAB business survey and tonight’s FOMC members speaking.