AUD Continues to Regain Losses as Risk Reverses
AUD
The AUD maintained its momentum this morning and kept its gains trading upwards of weekly highs against most major currency pairs. Wednesday was a good day for Asian equities with the ASX adding 1.25% and the Nikkei following with a modest gain of 1.4%. Risk currencies were on the up with the VIX (the fear index) down 6.3% to 20.52, assisting the AUD to get a leg up. This morning RBA Governor Lowe spoke, following Tuesday's monthly meeting where the RBA chose to keep rates at a steady 0.1% and continue bond buy back at $4B a month until February. Regarding risk sentiment, Gov Lowe has outlined that although Omicron was a clear risk factor, he did not think the new variant would hamper future economic recovery. No more local data today, however China is expected to release its CPI and PPI Inflation data with producers expecting continued strong levels of inflation which is expected to flow through to the consumer, with consumer inflation expected to almost double this month.
USD
The AUDUSD has continued its rise through 71c, trading higher at 0.7171 at this morning which is just off the early-morning highs. A key factor supporting this move was a continued reversal in risk sentiment, coupled with a quieter session overnight with mixed results on Wall St. The NASDAQ was trading up 0.6% late in the day while the Dow Jones and the S&P 500 were hovering around their opening levels. With little news coming out the US this morning, the market will look to the change in US Unemployment Claims tonight, markets forecasting 218K jobless claims which is slightly down from the previous month. The previous two prints have come in favourably low and may outline an increase in jobs sentiment in the United States. Another encouraging figure may guide the AUDUSD going into Friday before their monthly CPI data is released on Friday night which will be the key data piece for the week.
EUR
The AUD recovery has stalled here, trading sideways in the last 24hrs after hitting a daily high of 0.6330 before opening this morning at 0.6318. The pair has lost some momentum after rebounding nicely off its 2-month low at 0.6183 last week. Overnight European equities were mixed with both the DAX and CAC closing down 0.8% and 0.7% respectively. ECB President Lagarde spoke last night however the speech was largely related to Climate change and Cyber-attacks, the speech had a minimal impact on trading activity for the AUDEUR. Aside from the release of the German Trade Balance tonight, there is little in the way of data coming from the Eurozone tonight.
GBP
Overnight the AUDGBP continued its upward momentum, opening at 0.5426 after a lack of trading activity yesterday saw it rangebound at 0.5375 for the entire day. The Pound traded lower across most major currencies amid reports that “Plan B” restrictions would soon to be put in place to try and halt rising Omicron cases in the UK. Soon enough GBPUSD was making one-year lows near 1.3160. British equities mirrored this sentiment with the FTSE closing flat. Aside from the British RICS House Price Balance, there is little in the way of meaningful data coming from the UK until Friday which will see a host of figures pertaining to Construction and production output coupled with monthly GDP figures.
NZD
AUDNZD saw an impressive gain with the pair trading at 1.0529, up half a cent from yesterday and nearing 7 week highs. Data from across the ditch this morning unlikely help the recently weaker NZD; Manufacturing Sales for the last quarter showed a decrease of 2.2% which is well short of an expected 4.2% gain and also down from the prior read of an increase of 3.7%. Tomorrow morning sees the Business NZ Manufacturing Index which surveys manufacturers to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories.