Currencies Stagnate as Data Dries Up
AUD
The AUD is trading flat against most pairs over the weekend with little inspiration to shake up currency markets. Asian equities pushed marginally higher with the ASX and the Nikkei up +0.5% and +0.7% respectively, whilst US Equities were mixed with the Dow Jones +0.7%, S&P 500 +0.3%, and Nasdaq -0.2%. Gold has still not been able to recover fully from its mid-month drop-off, though still taking marginal gains of +0.3% over the weekend. A very quiet week ahead in Australia with no notable data releases. Currency markets will be keeping a keen eye on the COVID-19 lockdown developments in Sydney, Perth and Darwin with fears mounting of another national outbreak.
USD
The AUDUSD tracking sideways to sit at familiar territory of 0.7582 this morning. US Personal Consumption Expenditures (PCE), excluding the volatile food and energy components, increased 0.5%, below economists’ expectations of an 0.6% increase. In the 12 months through May, the Core PCE price index shot up 3.4%, the largest gain since April 1992. Federal Reserve Speaker Rosengren said that inflation was unlikely to be an issue in 2022 and 2023 though he otherwise acknowledged the strengthening US economy and expected the US economy to reach full employment next year. Looking ahead, there’s not much data of note today, but there’ll be a series of minor data releases later in the week including employment data on Friday.
EUR
The AUDEUR also remaining subdued, trading at 0.6353 at time of writing. Eurozone Equities were quiet, with leading indices closing mixed. The FTSE was up +0.4%, DAX +0.1%, and the CAC -0.1%. On Friday, Germany published the GFK Consumer Confidence Survey, which improved in July to -0.3 from -6.9 in the previous month. The focus for Euro traders this coming week will likely be on inflation numbers due from Germany on Tuesday, and the Eurozone as a whole on Wednesday. The European Central Bank has been crystal clear that it sees any increase in inflation resulting from the economic recovery as temporary and that it will not, therefore, tighten monetary policy in response. That, in turn, means that this coming week’s inflation data could weaken the Euro if they come in lower than expected and leave it unscathed even if they come in higher.
GBP
The AUDGBP is trading marginally higher, sitting at 0.5460 this morning. The BoE’s recent meeting provided little in the way of surprises with policy tools left unchanged, however members responded by adding that they will ensure that the recovery will not be undermined by a premature tightening in monetary conditions.UK Health Minister Matt Hancock has resigned due to breaking the virus-led restrictions, proposed by he himself. BOE Governor Andrew Bailey will speak later on this week will give further comments and currency markets will look for any change in tone.
NZD
The AUDNZD is trading within tight ranges, sitting at a rate of 1.0738 this morning. The jump in covid cases in Australia has led the Kiwis to cancelling over 85 flights between the countries. It’s worth noting that Wellington remains on the Level 2 alert for another 48 hours even as there are no fresh covid cases registered recently. In addition to the covid woes, the Reserve Bank of Australia’s (RBA) sustained support for easy money contrasts the increasing odds of the Reserve Bank of New Zealand’s (RBNZ) rate hike in early 2022. Given the light data calendar, further impetus will come from further developments relating to covid, as well as comments from the Fed policymakers.