AUD on the Back Foot Across the Board
AUD
The AUD has taken a hit overnight as we fell across most major currency pairs, the worsening Covid 19 conditions in Australia responsible for the latest slump. With activity restrictions covering 80% of the population in place, and 12mio people in lockdown, Australia is now under the most severe restrictions since the pandemic hit our shores in earnest last year. As one would expect, local equities performed poorly with the ASX down a modest -0.1%, Nikkei was down -0.8% while the Shanghai Comp was down -0.9%. Commodities were mixed, Iron Ore up 0.2% while Copper, Silver and Gold were all down overnight. A busy few days for data this week with China’s Manufacturing and non-manufacturing PMI for June due this morning at 11am, Macquarie strategy writing that the manufacturing sector should continue to benefit from external demand with forecasts projected at 50.9.
USD
The AUDUSD pair lost ground in the last 24hrs, trading at a rate of 0.7512 at the time of writing. This comes after covid conditions worsen in Australia and the recent restrictions for over 80% of the population. US Equities had a subdued session of trade, the S&P & Dow Jones had no movement while the Nasdaq gained a modest 0.2%. The virus woes and strong US Consumer Confidence for June, coupled with the market’s rush for safety ahead of Friday’s US NFP are likely favoring the Greenback. To the data tonight, traders will keep their eyes on the US ADP Employment Change for June, which serves as the early signal for Friday’s official Non-Farm Payrolls (NFP), an increase in jobs of 555K expected versus the previous 978K.
EUR
The AUDEUR pair lost significant ground overnight, coming in to trade at a rate of 0.6311 at the time of writing. European Equities had a positive session of trade with the DAX up +0.9% while CAC was up 0.1%. Earlier yesterday the The EU published the June Economic Sentiment Indicator, which improved to 117.9 from 114.5 in the previous month. The German Consumer Price Index edged lower in June, according to preliminary estimates, printing at 0.4% MoM and 2.3% YoY. Eurozone economic sentiment has surged in June to a 21-year-high as an accelerated pace of COVID-19 vaccinations led to further reopening and an improved mood across all sectors of the economy, notably in retail and services. It’s a busy day ahead for the EU with two note-worthy mentions being the Eurozone CPI and German Unemployment due today.
GBP
The AUDGBP pair followed suit and lost some ground overnight with the pair trading at 0.5426 at the time of writing. After the recent increased covid restrictions in Australia, it’s no surprise the AUD traded on the backfoot overnight. The Sterling has also been riding optimism in the UK’s vaccination and as we get nearer toward their further easing of restrictions, Prime Minister Boris Johnson announced at the start of the week that the remaining COVID-19 restrictions could be lifted on July 19. A widely vaccinated population is ensuring that there are not as many hospitalization numbers or deaths attributable to this wave, which is likely supporting GBP to some extent as investors bet on a post covid nation and economic recovery. To the data, this evening the UK releases final GDP figures followed by BOE Gov Bailey speaking tomorrow.
NZD
The AUDNZD being the only pair to open close to yesterday’s levels, coming in to trade at a rate of 1.0747, 5 pips up from the previous 24 hours. Both antipodeans trading relatively close to one another. Comments from the Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr that economic activity is returning to its pre-COVID-19 levels failed to provide any strength to NZD yesterday. Little in the way of economic data, the only note-worthy mention being ANZ business confidence report due this morning at 11am which has been low for a while now.