Tight Ranges to Start the Week
AUD
The AUD has had a relatively subdued overnight session, trading in tight ranges and losing only marginally against most major currency pairs, minus the NZD. US Equities couldn’t lend any support to the AUD, all three major indices losing some recent momentum, with the Dow Jones -0.2%, S&P 500 -0.3%, and NASDAQ -0.4%. Commodities continue to go from strength to strength with Iron Ore and Copper leading the charge, up +2.9% and +1.3% respectively, with Gold lagging behind to lose -0.1%. What might have slightly hampered the AUD is data from Australia’s biggest customer, China, which failed to impress yesterday with its YoY Retail Sales slipping to 17.7% against the forecasted 25.0%. Looking ahead, a quieter day is expected, at 11:30am RBA’s Board Meeting Minutes of the May will be scrutinised for any signals with respect to the future of the QE and yield target policies.
USD
The AUDUSD remains trading at similar levels to yesterday, sitting at 0.7767 this morning. Oil performed strongly and made +1.5% gains, and US 10-year Treasury yields gained 1.7 basis points (bps) to 1.65% to give support to the Greenback. The geopolitical tension in the Middle East has been further escalated with Reuters suggesting last night that “Biden is facing growing pressure from lawmakers in his own Democratic Party to play a more vocal role, but U.S. officials say he and his team have opted for a quieter effort, talking with Israeli officials and U.S. allies in the Arab world”. Any further escalations in the region could see volatility increase and the VIX increase, with markets favouring the USD as a safe haven. Little other data out of the US today, with focus being placed on Unemployment Claims and Philadelphia Federal Manufacturing Index being released on Thursday.
EUR
The AUDEUR also sitting in comparable levels to yesterday morning, trading at 0.6389 at time of writing. European markets indices with mixed results FTSE, CAC and DAX all losing out, but only slightly by -0.2%, -0.1%, and -0.3% respectively. Slim pickings for Euro data releases yesterday will continue with some lesser impacting Flash Trade Balance and Flash GDP q/q being released this afternoon.
GBP
The AUDGBP lost some ground overnight, once again losing the 0.55 handle to trade at 0.5493 this morning. Coronavirus remains a key concern for the UK, what might alleviate some pressure on the Pound is the easing of lockdowns with museums and cinemas being allowed to reopen. UK Prime Minister Boris Johnson still calling for a cautious approach to the unlocking, after he warned the spread of the Indian variant could threaten further any further easing in June. British Unemployment Rate and Unemployment Claimant Count Change will come out later this afternoon, and might give some indication of the improvements made since lockdowns have started to gradually ease.
NZD
The AUDNZD managed to buck the trend and posted gains to trade at 1.0768 this morning. With little economic data coming out of New Zealand, sluggish market sentiment amidst inflation jitters might be holding the NZD back, so the Kiwis will be looking for fresh insight from across the Tasman with the aforementioned RBA minutes offering catalyst for movement.