Pivotal RBA Guidance due Today at 2.30pm
AUD
The AUD experienced some modest gains across the board, excluding the NZD. US Equities were reasonably flat during the overnight session, with US 10 Year Bond Yields remaining at 1.43%. Oil gained 1.6% moving to $76.30 after Saudi Arabia caused tensions over a Critical Oil Output Deal before the upcoming OPEC meeting. Commodities performed well, with Iron Ore and Copper prices gaining 0.6% and 1.4% respectively, continuing to support the AUD. Some significant market movement can be expected later this afternoon, as the RBA will have its monthly meeting, in what investors believe will be one of the most important meetings of the year. After the US FED projected a hawkish tone last month in regards to their QE tapering program and interest rate hikes, markets are in waiting to see if the RBA will echo the same message or continue their loose monetary policy. Some investors believe the RBA will want keep the AUD/USD below $0.75 as inflation is still below target, and are unlikely to convey a hawkish message that will push the currency pair north, or adjust the cash rate. Shortly after, the RBA Governor Lowe is also due speak more in detail around the Central Bank’s Policy Plan, however with Australia being thrown into lockdown yet again, it seems unlikely that he will differ from his usual “constructively dovish” tone.
USD
The AUD/USD now trading towards the mid-0.75s, currently at a rate of 0.7541 at time of writing. It was a reasonably quiet overnight session as most of America was out for 4th of July Celebrations. US Equities were subdued overnight, with the S&P500 and NASDAQ both gaining 0.8%. Due to the AUD’s recent high correlation with US stocks, this could have granted the AUD some upside support. There is little scheduled for data today, with mainly the US ISM Service PMI being released later tonight. Markets will be more focused on the RBA Monetary policy statement and cash rate later this afternoon.
EUR
The AUD/EUR also making some gains during the overnight session, currently trading at a rate of 0.6356 at time of writing. French industrial production fell -0.3% (vs exp 0.8%), while Spanish, Italian and French Services PMI all came in slightly higher than expectations; Spain at 62.5 (vs exp 60.6), Italy at 56.7 (vs exp 56.2), France at 57.8 (vs exp 57.4). European Equities managed to make some slight gains, with the FTSE pushing 0.6% north. However, the AUD still managed to push slowly north despite the positive data and equity movements. ZEW Economic sentiment data is scheduled to be released later tonight.
GBP
The AUD/GBP trading slightly higher than yesterday’s levels, currently trading at rate of 0.5443 at time of writing. UK Prime Minister Johnson finally announced that the social distancing and mask wearing regulations would be lifted on the 19th of July. As England begins to come out of Covid, if Australia continues to miss vaccination targets and gets plunged into lockdown, the AUD could feel some extra downward pressure. A quite day ahead in terms of data, with nothing significant scheduled to be released.
NZD
The AUD/NZD being one of the only currency pairs trading lower than yesterday’s levels, currently at a rate of 1.0692 at time of writing. Australia’s Covid outbreak continues to pose a threat to New Zealand’s Delta variant Covid-free bubble, as investors and companies in waiting to see Australia’s unfolding situation. No significant data scheduled to be released.