AUD Fades as Lockdown's Grip Tightens
AUD
The AUD lost some modest ground across most major currency pairs during the overnight session. The AUD failed to receive any support from US Equities, despite the S&P500 closing around its all-time highs. US 10 Year Bond Yields also dropped -4.6 points, however it wasn't enough to keep AUD from falling. Commodities were slightly down during the overnight session, most notably with Iron Ore and Copper both dropping -0.5% and -0.2% respectively. The VIX, which is an index that measures the level of risk and fear within the market, increased 0.9%. The AUD commonly thrives in a market with positive risk sentiment, as such the increase in fear may have been another contributing factor to the AUD's downward movement. The current lockdowns are affecting risk appetite to a degree as we grapple with the competing theories of how serious this Delta outbreak actually is. The Western Australian Government have now also announced that Perth and the surrounding areas will now go into lockdown as the number of Delta variant cases continues to rise. If the situation continues to worsen, the AUD may see further losses, especially in the absence of other major economic data.
USD
The AUD/USD trading lower than yesterday’s levels, coming in at a rate of 0.7567 at time of trading. US Equities had a strong session last night, with the S&P500 and NASDAQ gaining 0.2% and 1% respectively. Most notably with the S&P500 trading at all-time highs into the close. Despite the AUD’s recent high correlation with US stocks, the AUD still saw some significant downside movement in contrast to the US equity gains. Nothing major scheduled in terms of data, with just CB Consumer Confidence statistics due to be released later tonight.
EUR
The AUD/EUR also losing some significant ground during the overnight session, currently trading at a rate of 0.6344 at time of writing. European Stocks finished in the red, with the DAX and CAC dropping -0.3% and -1% respectively. However, this didn’t seem to stop the AUD from taking losses. Growing lockdowns are no doubt playing a part here. The ECB’s President Lagarde due to speak tonight, with markets also in waiting for the release if Europe’s Yearly Flash CPI Estimate scheduled for Wednesday night.
GBP
The AUD/GBP also experienced some downward pressure, currently trading in at a rate of 0.5450 at time of writing. The UK joined in the Crypto crackdown with the Binance Cryptocurrency Exchange being banned. A new health minister, Sajid Javid, was installed overnight and is understood to be in favour of reopening on 19th July as is currently the plan in the UK. No significant data scheduled until tomorrow’s Final Quarterly GDP results. If the final numbers differ significantly from investor expectations, we could see some market movement.
NZD
The AUD/NZD being one of the only pairs to remain trading rather flat, currently trading in at a rate of 1.0742 at time of writing. The RBNZ Governor Orr is scheduled to speak in regards to the Reserve Bank of New Zealand’s Statement of Intent for 2021 – 2024. Investors will be watching carefully to see if there is any new information that could aid in them plotting the course to recovery.