AUD Holding Ground In Face of Protracted Lockdowns
AUD
The AUD trading relatively flat across most major currency pairs, USD excluded. Local equities were mixed, the ASX hit fresh record highs on Monday morning but weakened as the impact of Sydney’s lockdowns started to eat into the economic forecasts, closing at Friday’s levels at 7395.5 Points, Shanghai Comp made losses of -2.3% while the Nikkei made gains of 1%. Commodities were also mixed, Copper made its highest gains in near 6-weeks, supported by supply worries and demand for rebuilding infrastructure after the recent floods in China, Iron Ore was up a minor 0.6% while Gold and Silver both made losses. Another quiet day ahead for the Aussie dollar, before tomorrow's Australian CPI data which will be the main local event for the week. This release will be looking at the Q2 period, so not taking into account the brunt of the Sydney lockdowns, however after a disappointing number last time around and with the spectre of increasingly poor numbers still to come through the pipeline, markets (and the RBA) will be watching closely to gauge how the economy is reacting to covid-related influences.
USD
The AUDUSD pair started the week positively, posting gains overnight to trade at a rate of 0.7381 at the time of writing. A strong start to the reporting season in the US saw all three major US Equities trade at record highs in the overnight session with both the S&P 500 and Dow Jones up 0.2% while the Nasdaq made minor gains of 0.09%. To the data, Investors should keep an eye on the US-China trade talks and Wednesday’s FOMC decision, where the Fed is likely to throw some hawkish hints on tapering, possibly in the final quarter of this year. Australia sees no relief from the Delta covid variant flareups while Goldman Sachs predicts that the Sydney covid lockdown is likely to persist until September.
EUR
The AUDEUR trading near yesterday’s levels, the pair falling to as low as 0.6226 overnight before coming in to trade at 0.6255 this morning. European Equities were mixed, CAC up 0.1% while the DAX was down -0.3%. Yesterday’s data showed German business sentiment worsened in July amid an increase in coronavirus infections and supply woes, missing forecasts for an increase. The Ifo business-climate index came in at 100.8 points in July compared with the 101.7 points registered in June, according to data from the Ifo Institute released Monday. Little in the way of macroeconomic data today, investors likely awaiting upcoming Eurozone CPI and unemployment data due on Thursday in addition to the recent looming covid developments in the AU with lockdown extension looking likely.
GBP
The AUDGBP pair bucked the trend, trading lower to make 14-month lows of 0.5329 overnight before an unconvincing bounce to 0.5341 this morning. The London Benchmark FTSE made no movement of 0%, a cautious result as markets digest news of 6 days straight of decreasing covid cases. The UK recorded 24,950 new infections on Monday, a drop of 15,000 on 39,950 cases a week ago. The number of new cases fell for a sixth day in a row - the first time since November, during England's second national lockdown. The PM’s spokesman said the pandemic was not over and that ‘we should expect a rise in case numbers’ this comes after the government lifted all restrictions a week ago. No note-worthy mentions in the way of data this week.
NZD
The AUDNZD trading relatively flat, the pair currently trading at a rate of 1.0549 at the time of writing. Both antipodeans have remained relatively buoyant despite the recent suspension of the trans-tasman travel bubble after rising delta covid cases in Australia. Little in the way of data this week with only the Aussie CPI Data due tomorrow in addition to the looming covid outbreak in Sydney,