Lift in Iron Ore Helps AUD up off Canvas
AUD
The AUD has bounced back from its recent lows finding support to make gains against the majors overnight, barring the Kiwi Dollar. US Equities gains illustrating improving market confidence, posting minor gains with the NASDAQ rising +0.5%, while the S&P 500 and the Dow Jones were +0.2% higher. The AUD really benefitted from commodities as Iron Ore was the flavour of the day hitting back after a recent slump gaining +2.6%, whilst Copper gained +0.9% and Gold lost -0.2%. Domestic interest is still firmly focussed on the evolving COVID situation as cases in NSW have stagnated for 3 consecutive days and the milestone of 6 million jabs in arms being reached has brought a glimpse of hope locally. Looking ahead, there’s only some second-grade data until Retail Sales on Friday morning.
USD
The AUDUSD making a resurgence as some softer data out of the US put the Greenback on the backfoot, trading at 0.7256 this morning. New Homes Sales in the US increased by +1.0% on a monthly basis in July to a seasonally adjusted annual rate of 708,000. This was somewhat above expectations for July, but still down 27.2% year-over-year, since sales increased sharply following the early months of the pandemic. Also released was the Richmond Fed Manufacturing Index fell to 9, down from 27 and well short of expectations of 24. It will be interesting to see if the recent softening of the US data pushes back the Fed’s tapering plans and exerts downside pressure on the US Dollar. Currency markets remain cautious ahead of the annual speech of Fed Chair Jerome Powell at the Jackson Hole Symposium, on Friday.
EUR
The AUDEUR continues rise up from Friday's 9-month lows to sit at a level of 0.6170 at time of writing. Germany published its second estimate of its Q2 GDP, which came in better than anticipated, upwardly revised from 1.5% QoQ to 1.6%, but barely moved currency markets. European equity markets have been modest of late and continued that trend with modest gains on the FTSE and DAX, up +0.2% and +0.3% respectfully. The German IFO Business Climate Index is due out this evening, the last of any noteworthy data out of the Eurozone this week.
GBP
The AUDGBP trading higher with the AUD really taking the lead off the back of stronger commodities, trading at 0.5285 this morning. There is no first-tier UK data due this week so little to disturb traders which are likely focused on the Jackson Hole gathering, which will now be virtual because of the spread of the delta variant. One month on since the UK dropped almost all restrictions, it is becoming clearer that it comes with a cost, with the UK averaging 90 deaths and 800 hospitalisations each day from Covid. Looking forward, direction will be taken from any change in those health conditions and from any taper talks from the US.
NZD
The AUDNZD remaining at similar levels overnight as our fellow antipodeans also saw benefit from the revival of commodities and Iron Ore, still trading at 1.0456 this morning. Yesterday’s Retail Sales for the second quarter showed a decent gain of 3.3% which was comfortably better than expectations and higher than the previous quarter, currency markets were unchanged on the release. Concerns still remain as New Zealand’s total cases jump to 148 after announcing an increase of 41 yesterday, with a child under the age of 1 being the youngest case in the Delta outbreak so far, says Director-General of Health Ashley Bloomfield.