Resurgent USD Dominating Currencies into Week's End
AUD
The AUD had a mixed session of trade overnight, taking another significant step backwards against a resurgent USD. Local Equities followed suit, the ASX and Nikkei were both down while the Shanghai comp was up a modest +0.2%. Commodities performed poorly overnight, Copper down -4.8%, Silver was down -4.1% while Iron Ore was down a modest -0.4%. Crude Oil fell -1.6%, hovering above $70 a barrel. No economic data on the docket locally today. Investors still digesting the recent FOMC statement form Thursday (see below). Aussie Retail Sales figures due on Monday.
USD
The AUDUSD pair headed south overnight dropping into the 0.7540’s before bouncing slightly back to trade at 0.7556 at the time of writing, representing 2 month lows. Overnight there was weaker-than-expected US jobless claims, initial claims rising to 412k, up from 375k and worse than expected 360k. US Equities had a mixed session, Dow Jones was down -0.6%, while the Nasdaq was up +0.9% and the S&P500 had no movement. There is no data due for release today, Investors continue to adjust positioning following the FOMC meeting yesterday, with expectations of further US Dollar demand leading into the weekend. FOMC Member William speaking on Tuesday and Flash Services & Manufacturing PMI Wednesday evening.
EUR
The AUDEUR pair had a relatively subdued session of trade, trading at a rate of 0.6342, 5 pips lower than yesterday’s open. Both major currency pairs trading within range of the other given the recent upbeat message from the FOMC event late on Wednesday, where they opened the door to the expectation of rate hikes in late 2023. European equities had modest gains overnight, the DAX up 0.1% and CAC was up 0.2%. Markets had little reaction to last night’s Eurozone release of inflation figures which had CPI rise 2.0% and the Core gauge rose 1.0% y/y to May. No-noteworthy data on the docket heading into the weekend with only ECB Lagarde speaking on Tuesday.
GBP
The AUDGBP traded at a loss overnight, the pair trading at 0.5422 at the time of writing, a fresh 14-day low. The FTSE underperformed overnight; the London benchmark index ended 0.4% lower. The BOE Chief Economic Andy Haldane noted some optimistic comments late on Thursday, saying the UK economy was nearing pre-pandemic output levels. His hawkish comments remain in investors minds ahead of next week’s BOE monetary policy meeting, with expectations of a sooner-than-expected rate hike building up, especially after the FOMC turned hawkish on Wednesday. No noteworthy data heading into the weekend. UK is due for Flash Service & Manufacturing PMI on Wednesday.
NZD
The AUDNZD pair are trading near the same levels as yesterday, currently trading at a rate of 1.07741 at the time of writing. The data from New Zealand revealed on Thursday that the GDP grew by 2.4% in the first quarter, beating the market expectation for an expansion of 0.9% by a wide margin however NZD hasn't capitalised. Little in the way of data over the next week, with the RBNZ Policy review and NZ CPI for July in investors view.