Commodities Lend a Hand to Beleaguered AUD
AUD
The AUD is travelling flat across the board after a week of significant downward movement. US Equities performed well, while the US 10 Year Bond Yield remained at around 1.215%. The VIX, which is an index that measures the level of risk and fear within the market, dropped -11.6% overnight after making gains throughout the week so far. The AUD commonly thrives in a market with positive risk sentiment. With the recent lockdowns and accompanying increase in investor fear, this dip in the VIX Index could lend a hand to the beleaguered AUD. Also helping to stem the bleeding, Commodities finished in the green, with Iron Ore and Copper both gaining 0.5% and 1.5% respectively. The July RBA Board Meeting Minutes that were released yesterday revealed that, due to the current Covid situation and vaccine rollout, it is very difficult for the policy makers to see a scenario in which there is a rate hike before April 2024. If the RBA becomes the last central bank to initiate adjustments to their tapering policy, the AUD could suffer the consequences. Australian Monthly Retail Sales is due to be released at 11:30 today but won't fully capture the current heavy lockdowns.
USD
The AUD/USD traveling relatively flat, currently trading in at a rate of 0.7336 at time of writing. US Equities had a strong recovery from some earlier losses, with the S&P500 and NASDAQ gaining 1.5% and 1.6% respectively. However, this failed to provide adequate support for the AUD, despite it’s recent high correlation with US stocks. US Unemployment Claims scheduled to be released late tomorrow night. A pretty quiet week for data here, markets adjusting to risk sentiment and covid developments.
EUR
The AUD/EUR also trading at roughly the same levels as yesterday, trading at a rate of 0.6226 at time of writing. Markets in waiting for tomorrow’s ECB Press Conference and the accompanying Monetary Policy Statement. There is a lot of attention been given around the world to Central Banks in regards to their tapering policies, any change in tone or forecasts tends to move markets. As such, such events should be a point of importance for businesses and investors. The ECB has recently been comparatively downbeat on the prospects of recovery for Europe, something which the recent floods certainly won't help to turn around quickly.
GBP
The AUD/GBP trading slightly higher than yesterday’s levels, currently coming in at a rate of 0.5381 at time of writing. Investors will be listening to BoE Monetary Policy Committee’s Member, Broadbent, speaking tomorrow night. If any insight is provided in regards to the BoE’s Monetary Policy plans, markets could experience some movement as a result. The world is also closely watching Covid developments in the UK now that ALL restrictions have been released. Some predict 6-figure daily case numbers and 4-figure daily death rates.
NZD
The AUD/NZD traveling relatively flat, currently still floating at a rate of 1.05897 at time of writing. As the Delta variant spreads around Australia, slowly followed by accompanying lockdowns, New Zealand continues to close its borders to different Aussie states, South Australia being the most recent victim. No significant data scheduled to be released apart from this morning Milk Price Auction which showed another contraction.