AUD Starts the Week Strongly
AUD
The AUD maintained its bid tone throughout the overnight session, recouping some lost ground across most major currency pairs. Asian Equities finished the session mixed with the Shanghai Comp gaining a stellar 2.0% while the Nikkei was down -0.7%. Australian shares fell on Monday, with the Bank Sector slumping due to a hit in margins, dragging down stocks. The ASX 200 was down 0.1% to 7,111 points. Commodities were relatively subdued with Iron Ore gaining near 2.5% while Gold & Silver has next to no movement, and Crude oil dipped 1.2% to $92.18 a barrel. In domestic news on Monday, Australia will open its borders to fully vaccinated international travelers from late February after a two-year lockout, Australian PM Scott Morrison announced. Looking ahead, only lower-tier data on the docket, with NAB’s business survey being the key mention. There are expectations that Omicron has weighed further on business conditions in Jan and should be reflected in the monthly business survey.
USD
The AUDUSD rises to regain its 71 handle, pushing to as high as 0.7129 before coming back down to trade at 0.7124 at the time of writing. The uptick struggled to find acceptance above the mid 71’s amid the prevalent market mood, which tends to weigh on the riskier Aussie. Wall Street recovered from some of its earlier weakness and closed slightly higher on Monday with the Dow Jones up 0.6%, the Nasdaq up 0.4% while the S&P 500 closed marginally in the green at 0.3%. The yield on 10-year Treasuries was little changed at 1.9%. It’s a slower start to the week with little in the way of Macro releases. Investors now focus on ongoing Fed speak and the release of US CPI for January, due on Thursday. In the meantime, US treasury yields and broader market risk sentiment are the short-term drivers for price trajectory for the AUD/USD pair.
EUR
The AUDEUR pair gained positive traction on Monday to regain the 0.62 handle, with the pair trading at a rate of 0.6227 at the time of writing. European Equities rose following five straight weeks of declines. CAC gained 0.8% and the DAX was up 0.7%. Markets are on alert for rate rise in the Eurozone after the ECB last week was considered to have adopted a more hawkish tone. Eurozone bond yields rose, with Germany's 10-year government bond yield, the benchmark of the euro zone, up 2 basis points to 0.22%, its highest level since January 2019. ECB’s Lagarde on the wires on Monday, largely repeating commentary from the last ECB conference, saying there was no signs that measurable monetary policy tightening would be required. To the data this evening, only lower-tier data among the releases with Italian Retail Sales figures and French Trade Balance the only data of note.
GBP
The AUDGBP staged a bullish reversal to trade among weekly highs overnight, with the pair trading at a rate of 0.5264 this morning. The London Benchmark FTSE 100 closed nearly 0.8% higher, with global miners providing a strong boost to the blue-chip index. There is no data on the docket today. For the week ahead, there are two key data events, market participants are waiting to see the release of US Consumer Price data for January on Thursday and on Friday, preliminary UK Gross Domestic Product is due for the fourth quarter and December. Expectations that the UK GDP could contract 0.8% thus bringing it below its pre-covid level, driven by voluntary Covid measures and a substantial amount of people isolating due to the recent Omicron surge.
NZD
The AUDNZD followed suit to gain positive traction overnight, trading as high as 1.07440 before coming back to trade at 1.0736. It’s been a quieter start to the week as traders digest the busier week of events last week. This is an even quieter week for domestic data with only second-tier data on the docket, RBNZ Gov Orr speak being the only data of note. Market participants this week will focus elsewhere as US CPI could cause some further market volatility on Thursday.