AUD Pulls Back from Significant Highs

AUD

The AUD slides for the first time in a week as market sentiment soured and risk assets weaken. Asian Equities were mixed with the Shanghai Comp up 0.2% however the Nikkei took a dive (-1.9%) midway through the session after reports hit the market that the distressed Chinese property company Evergrande had failed in its attempt to sell a 50.1% stake in its listed property management arm to another Chinese property company Hopson, renewing concerns about the potential contagion from China Evergrande’s debt crisis. The ASX finished just 1.7 points higher at 7415.4 points. Commodities were marginally in the green with Gold and Silver gaining 0.2% while Iron Ore was up 0.6%. It’s another quiet day ahead on the data front with all eyes on the unfolding Evergrande fiasco and Australia’s Preliminary PMIs for October with expectations to show some improvement as parts of the economy emerge from the lockdowns.

USD

The AUDUSD pair retreated from six-month highs to trade at a rate of 0.7467 at the time of writing. Wall Street was relatively flat overnight with the Nasdaq posting gains of 0.4% while the S&P 500 finished the session 0.2% higher. The yield on the benchmark 10-year US government bond held steady near the 1.67% mark, or the highest level since May and extended additional support to the greenback, while oil fell 1% to $82.60 a barrel. On the US data front, US weekly jobless claims came in better than expected with initial claims falling marginally to 290k to beat estimates of 297k while continuing claims fell to 2.481mio, down from 2.603mio and better than expectations of 2.548mio. Also released and the Philly Fed Business Survey for October fell to 23.8, down from 30.7 and below expectations of 25.0. It’s a busier day ahead for macroeconomic data with US PMIs and Fed Chair Powell speak being of key note.

EUR

The AUDEUR pair lost some bullish momentum overnight to trade at a rate of 0.6424 at the time of writing. European Equities close marginally lower as investors track the China property woes with both the CAC and the DAX down -0.3%. Overnight the Eurozone docket saw the Consumer Confidence for October fall from -4.0 to -4.8 though this was better than expectations of -5.0. It suggests people are less optimistic about the economic outlook, as supply chain problems persist and surging energy costs push inflation to a 13-year high. No reaction to the data. There’s a flurry of data on the docket for the Eurozone this evening with UK GDP and EU Flash & Manufacturing PMIs among the release. Europe’s PMIs could provide an early glimpse at how supply chain disruptions are hampering production and holding back growth more generally.

GBP

The AUDGBP pair followed suit to trade at a loss this morning, currently trading at a rate of 0.5410 this morning. The London FTSE 100 index fell 0.5% on Thursday, as miners dropped due to rising troubles in China’s property sector and investors fretted about rate-hike concerns. On the low tier front, in the UK, the Public Sector Net Borrowing for September, at £21.014B, was lower than the £27.152B expected. In the event, the BoE’s new chief economist, Huw Pill, said inflation in Britain could surpass a "very uncomfortable" 5% and the question of whether to raise interest rates was a "live" one at its early November meeting, the Financial Times reported. The BoE has previously stated that inflation is likely to go above 4% and since that forecast, energy prices have risen further. Britain's economy is close to regaining its pre-pandemic size, although the pace of its recovery has slowed. A busier day ahead for the pound with UK GDP and PMIs among the release.

NZD

The AUDNZD pair bucked the trend to trade at similar levels seen to yesterday, trading at a rate of 1.0437. This morning, PM Jacinda Ardern revealed New Zealand will move to a new "traffic light" system to manage Covid-19 when District Health Boards have 90 per cent of its eligible population vaccinated. Businesses will be able to continue to operate at each of the risk levels, and each setting can be used in a highly targeted and localised way, Prime Minister Jacinda Ardern says. In a suite of announcements that establish a pathway out of restrictions, the Government is also providing up to $940 million per fortnight to support businesses through the challenging period, particularly those in Auckland. A new $120m fund has also been established to help lift Kiwi vaccination rates.