AUD at 6 Month Lows vs USD
AUD
The AUD still feeling the hangover after last week’s FOMC meetings, on the back foot against most majors. US Equities were lower during the offshore trading sessions with the S&P 500 and the NASDAQ both falling 1%, while the Dow Jones finished 1.5% lower. The absence of fresh Australian data and plummeting Gold prices added to the bearish case, as the bright metal fell to 1,760.87 an ounce, its lowest in almost two months. The Australian government said on Saturday it was lodging a formal complaint with the World Trade Organisation about China’s imposition of anti-dumping duties on Australian wine exports, further escalating the trade standoff with Beijing. Wine industry exports plummeted from about $1.1 billion to just $20 million in recent months and it is part of multiple measures taken by the Chinese government against Australian products. Monthly Retail Sales are set to be released at 11.30 this morning and it could get even worse for the AUD if Melbourne lockdowns that started at the end of May weigh in on figures.
USD
The AUDUSD fell to the lowest it has been in 2021, having to look back to mid-December to find these levels. It slipped into the 0.74s before re-ascertaining the 0.75 mark, currently trading at 0.7503 this morning as exporters rub their hands together excitedly. St Louis Federal President Bullard reinforced the hawkish tilt of last week's FOMC meeting, which could be a potential prelude to this week's series of commentary from Fed speakers, with remarks from voting members Williams (21st and 24th), Daly (22nd), Bowman (23rd), and Bostic (23rd). In addition to Fed Speakers, Fed Chair Powell will also speak on late Tuesday night, where currency markets will be on the lookout to see whether or not he will maintain the 2023 rate rise mantra. Growing speculation of a US equities sell off in the face of a newly Bullish Fed Reserve is something the AUD will have to contend with, as we know if risk assets perform poorly then the AUD tends to follow suit as well.
EUR
The AUDEUR also on the decline, but still maintaining the 0.63 handle to trade at 0.6318 at time of writing. European Equities were all in the red, with sell offs putting the FTSE -1.9%, DAX -1.8%, and the CAC -1.3%. There is no major data from the major EU nations today but this week is a busy week for Eurozone sentiment data, kicking off Tuesday with the flash consumer confidence number for June. Tonight, the focus will be on the European Central Bank President Christine Lagarde, due to testify at a virtual hearing before the European Parliament Economic and Monetary Affairs Committee. Recently Lagarde has been calling for further stimulus to kick start the EU from its post Covid slump, a message which is now in stark contrast to the US central bank. If this disparity continues for long, we could see significant EURUSD weakness which could then have flow on effects into AUDUSD.
GBP
The AUDGBP managed to buck the trend and is marginally higher than the end of last week, sitting at 0.5427 this morning. Following the operational decision to adjust its weekly asset purchases, it seems as though the BoE will retain the current course for monetary policy as the “Committee does not intend to tighten monetary policy at least until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2% inflation target sustainably.” Not much on the macroeconomic news docket out of the Britts, with Monetary Policy Summary on Thursday being the major data catalyst for the week.
NZD
The AUDNZD also picking up some gains to trade at 1.0795 this morning, with the Kiwis feeling the wrath of weaker commodities more so than AUD. Friday morning's Trade Balance figures are the only piece of macro data for the week ahead.