AUD Starts The Week Strongly
AUD
The AUD had a strong overnight session across the board as it gained against most currency pairs with GBP being the only minor loss overnight. Equity markets had a mixed session, Shanghai Comp and Nikkei were both down -0.8% and the ASX closed with no movement, still sitting pretty above 7000 points. The only notable commodity gains were Crude Oil as it trades below 65$ up +1.4% and Iron Ore was up 2.4%, still trading within its all-time highs as it supports the commodity-backed Aussie dollar. Today's RBA meeting is the key focus in Australia this week followed by the Monetary Policy Statement on Friday. In Friday's updated statement, the RBA's forecasts for GDP growth and inflation are likely to be revised a bit higher, and the Unemployment Rate much lower. The Bank’s prior forecasts had the jobless rates falling to 5¼% by mid-2023 and however there is a strong case to lower this to 4¾%, not just tweak it lower to 5%. As usual, today's meeting happens at 2.30pm and all monetary policy levers are expected to remain static.
USD
The AUD capitalised on the US Dollar weakness overnight, bouncing strongly out of Friday's weakness, currently trading at a rate of 0.7758. The USD was soft across the board after US Economic data missed expectations and with varying corporate earnings helping US yields tick lower (2.2bps). To the data itself, and ISM Manufacturing Data early this morning in the US saw manufacturing activity grow at a slower pace in April, posting actual results of 60.7% a retraction on the previous 64.7%. US equities were mixed, the Nasdaq closed down -0.5%, the Dow Jones posting gains of 0.7% and the S&P 500 saw minor gains of 0.3%, still trading at their respective all-time highs. No-noteworthy economic data today in the US as markets await the US ADP non-farm Employment Data on Wednesday Night and then the official Non-Farms Employment results on Friday night.
EUR
The AUDEUR pair followed suit, benefitting from lower USD demand more than EUR, currently trading at 0.6433 at the time of writing. European equities were marginally stronger overnight with the DAX gaining 0.7% and the CAC was also up 0.6%. Germany, the Eurozone’s largest economy, impressed with a Retail Sales report for March that crushed the consensus with a gain of 7.7%, up from a previous gain of 1.2% and easily beating the forecast of 2.9%. It was the highest gain in 10 months and points to stronger consumer demand, supporting Eurozone’s economic comeback, post covid. Not a lot on the economic calendar today as we await a data-filled day on Wednesday as Eurozone Services PMI and EU economic Forecasts are released.
GBP
The AUDGBP pair the only currency pair to post modest losses as it trades at 0.5580, 4 pips below the previous 24 hours. The latest remarks from policymakers indicate the Bank of England is confident the economy will rebound strongly in the current and next quarters, as the economy reopens after strong vaccination rollouts have put a hold on case numbers. Hence, growth forecasts will probably be revised higher in the Bank’s quarterly Monetary Policy Report on Thursday, talks of QE tapering by some analysts has spurred attention from investors as well. No other noteworthy data on the economic calendar today.
NZD
The AUDNZD pair posted modest gains overnight as it trades at 1.0778, both antipodeans almost equally trading with the other as both currency pairs take advantage on the broader US dollar weakness. The AUDNZD may see some volatility over the next two days with aforementioned RBA interest rate decision today and the New Zealand Employment data on Wednesday could move currency markets. Later on Wednesday, Reserve Bank of NZ Governor Orr will speak, due to testify on the Financial Stability Report before Parliament's Finance and Expenditure Committee in Wellington.