Budget to Blow the Budget
AUD
The AUD trading fairly flat this morning, while slightly losing some ground against the USD and GBP. US Equities took a hit last night with both the NASDAQ and S&P500 in the red this morning. US yields also ticked marginally higher, with the 10-year bonds reaching back into the 1.6%. The gains in US yields, as well as the weaker US Equities, could have both been a large contributing factor to the losses experienced by the AUD. The VIX, which is an index representing the market’s current risk sentiment and expectations of volatility increased 15.6% last night. As we know, the AUD does not like risk and uncertainty, so this could be another contributing factor to the AUD's weaker performance overnight. Commodities were also significantly down last night with Iron Ore losing -4.2%, however the AUD still modestly holding its ground. Despite its rather sluggish performance against other major currencies, the AUD/JPY reached 3-year highs last night at 85.80, with some FX specialists speculating the pair could move back towards support at the 83.00 levels. Market eyes are focused on the Australian Annual Budget Release later tonight, which based on the government's stimulus plans and conveyed messages could significantly move markets. Chinese inflation data also scheduled in for later this morning.
USD
The AUD trading in this morning slightly lower than yesterday’s levels, despite nearly reaching 0.79c last night, currently trading at a rate of 0.7834. US Equities had a rough overnight session last night, with the NASDAQ and S&P500 both down -2.5% and -1% respectively. Due to the AUD’s recent correlation with US Equity fluctuations, this could have been a significant factor contributing to the AUDs slight losses this morning. Fed’s Evans continued the central bank's recent messages, explaining that the recent employment report showed a complex picture as the US economy re-opens and it would take more data for the FED to shift its policy. Markets in waiting for Wednesday night’s monthly CPI and Crude Oil Inventory data.
EUR
The AUD/EUR still trading around yesterday’s levels, currently trading at a rate of 0.6454. Europe reached a significant milestone last night delivering the 200 millionth vaccine dose. With Covid-19 infections also easing, their cities are beginning to reopen again and investor confidence could rise as a result. European Equities also had a rather flat overnight session, with the DAX and FTSE coming in at 0.0% and -0.1% respectively. The EUR looking at a quiet week this week with both France and Germany on a Bank Holiday this Thursday.
GBP
The AUD/GBP took a significant step back last night, currently trading at 0.5544 at time of writing. Some exporting companies now facing a new fresh hell, with recent post-Brexit trade agreements expressing clauses to which prevent manufacturers in Boris’ new freeport-type zones from benefiting from the deals. The GBP looking at a busy day tomorrow with BoE Gov Bailey to speak twice, investors may use this to gauge on the Central Bank's plans and views on the state of the Economy. UK Prelim Quarterly GDP results also scheduled to be released tomorrow.
NZD
The AUD/NZD trading slightly higher than yesterday’s levels, currently trading at a rate of 1.07839. Luckily the NZ travel bubble has reopened as Sydney records its 5th day of no new local infections. More travel bubbles also on the forefront as the global economy starts to recover from Covid-19. The NZD looking at a quiet week with no significant data scheduled for release.