Commodity Currencies In Favour
AUD
The AUD made gains against most major currency pairs last night except for the NZD. It was a mixed session for both US Equities and commodities last night. With these two usually being some of the major influencing factors for AUD movements, the gains go somewhat unexplained, although other commodity-sensitive currencies also outperformed. Some FED officials, in response to Yellen’s hawkish comments two nights ago described that Inflation was well under control, US interest rates dipped as a result, also slightly dragging yields down with it. Which could have been a contributing factor the AUD gains, but is unlikely the only piece of the pie. The Australian government have come under some heavy pressure to release the travel ban on Australians trying to return home. Political tensions also rise between Australia and China as the two governments' war-of-words continue to become more serious. Reports also suggested that G7 members were “deeply concerned” about human rights abuses from China. The political turmoil could cause uncertainty in the market and affect investor confidence. This could cause the AUD to weaken, as it commonly performs well with positive risk sentiment and investor confidence. NO local data on the cards today, although China is back from a 3 day holiday.
USD
The AUD/USD had some modest gains last night, currently trading in at 0.7749 at time of writing. US Equities had mixed results last night with the NASDAQ falling 0.3% and the S&P500 up 0.1%, as such is unlikely what influenced the AUD strength. However, US interest rates dipped slightly lower after some FED officials stated that inflation was under control, as a result US yields also dipped -1.4bps. The data was also weak, as the US ADP Non-Farm Employment change significantly missed the mark, gaining 742K (vs exp 872K), Crude Oil Inventories beat expectations coming in at -8.0M (vs exp 1.9M). The combination of these two factors (lower yields and weak data) was enough to allow AUD to edge higher. Market eyes turn to tomorrow night's official Employment report, the Unemployment Rate is hoped to reduce from 6% to 5.8%
EUR
The AUD/EUR also making some gains during the overnight session, currently trading at a rate of 0.6453. EUR had some mixed data releases last night with Spanish Unemployment Change missing the mark coming in at -39.0K (vs exp -70.0K), but Spanish PMI beating expectations at 54.6 (vs 50.0 exp). Italian, French and German PMI all came in around what was expected. The EU have also announced the possible deterioration of the ‘Comprehensive Agreement on Investment (CAI)’ with China, one of two international agreements with China to fall in a just a number of weeks. The EUR looking at a quiet finish to the week with just some EU Economic Forecasts scheduled for late tomorrow night.
GBP
The AUD/GBP following the common trend, also making some modest gains last night, currently trading at 0.5571 at time of writing. The UK New Car Registrations increased a drastic 3177% overnight, a massive gain after 2020 saw car sales collapse. The UK also has a data heavy day today with the BOE releasing its Monetary Policy Summary and Asset Purchase Facility. There is word that the BOE could vote for a slowing of purchases due to a strong recovery by the UK economy. This could result in a strengthening of the GBP, and market movements can be expected upon release.
NZD
The AUD/NZD being one of the only major currency pairs to fall off during the overnight session, coming in at 1.0735 at time of writing. NZD had some strong employment data released yesterday, with the Quarterly Employment Change moving up 0.6% (vs exp 0.3%), and the unemployment rate dropping to 4.7% (vs exp 4.9%). The New Zealand government decided to take a lighter tone towards china, by choosing not to label the alleged abuses of the Uyghur people in Xinjiang as acts of genocide, instead wording it as discussions of human right abuses. NZD looking to finish the week on a lighter note, with only Quarterly Inflationary expectations scheduled to be released tomorrow.