A Tired AUD Pressuring Support Levels

AUD

The AUD remained subdued across most major currency pairs overnight, illustrated by a sea of orange on the crosses above. Covid jitters overshadowed stronger Chinese inflation figures and did little to provide any meaningful impetus to the China-proxy Australian dollar. Chinese CPI (Consumer inflation) data rose 1% YoY in July, beating the market’s expectations, while the PPI (Producer inflation) data for the same period was up 9%. The data shows higher prices being paid by producers compared to consumers which could adversely impact corporate margins/profits if sustained for a period of time. Asian equities ended the day mixed with the Hang Seng up 0.4% and CSI 300 up by 1.3%. The ASX closed the session flat as the financial sector gains offset further losses in resources. Commodities were mixed in the overnight session; Silver was up 0.4% and Gold gained 0.2% (after an extremely volatile session), while Iron Ore closed with no movement at 0%. It’s a quiet day ahead for the local calendar with only the NAB business confidence report being the only mention for this afternoon. Traders and investors still eyeing off the surge in Covid cases and the associated lockdown of more than half of Australians. The AUD is looking heavy this morning, pressuring support levels against USD and JPY.

USD

The AUDUSD peaked at 0.7362 overnight before edging lower, coming in to trade at 0.7330 this morning and pressuring support. Hawkish Fed Commentary helped extend the broader USD strength overnight, FED Bostic said that the US was ‘well on the road’ to meeting the FED’s tapering threshold of ‘substantial further progress’ and that their goal would be achieved with another month of two payrolls growth similar to July’s data (+943k). It was a mixed session for the US equity markets overnight, Dow Jones down -0.3%, Nasdaq was up 0.2% and the S&P 500 made no movement of 0%. The dip in oil continued with a further fall of 2.1% to $66.80 a barrel while US 10-year yields ticked 2.5bps higher to 1.325%. No noteworthy data on the docket this evening. Tomorrow’s US CPI data and weakening commodity prices set to weigh on both pairs.

EUR

The AUDEUR pair sitting at almost identical levels seen to yesterday morning, trading at a rate of 0.6244 this morning. European Equities posted modest losses overnight with both the DAX and the CAC down 0.1%. In some early European Data, German exports rose, jumping 1.3% in June, the 14th monthly rise in a row. Following this data, the Eurozone Sentix investor confidence indicator was down from 29.8 in July to 22.2 in August. A quiet day ahead for data before the German ZEW is released this evening. The survey of economic forecasts looks likely to acknowledge the German growth uplift in Q2 through a big jump in the “current situation” component. But the “expectations” subindex is very likely to retreat as fears around COVID variants intensify.

GBP

The AUDGBP pair fell as low as 0.5282 before coming back to trade at 0.5292 this morning. The AUD followed the overall market direction and refreshed a weekly low. The London benchmark FTSE 100 had modest gains of 0.1%. Tensions between the UK and the EU returned to the spotlight with Nigel Farage, former leader of the UK Independence Party, saying that Britain should take control of the migrant crisis, calling for the EU's and particularly France's collaboration on the issue. Farage said that the only way to end people illegally crossing the Channel is to send migrants back to France. Little in the way of economic data for the pound this week with only the UK GDP data due on Thursday evening.

NZD

The AUDNZD pair remained under pressure overnight, trading marginally lower this morning at 1.0483. It was a quiet overnight session with both antipodeans benefiting off the back of the better-than-expected Chinese CPI and PPI data yesterday. There is little economic data to drive both pairs this week, the only noteworthy mention being the Kiwi inflation figures on Thursday morning. Remember next Wednesday's RBNZ meeting is the main event coming through the pipeline.