Rising Commodity Prices Support AUD Amidst Supply Concerns

AUD

The AUD continued its bid tone throughout the overnight session to trade higher against most of the major G10 currency pairs. Asian Equities finished the session in the green with the Nikkei outperforming 3%, its highest level since January, while the Shanghai Comp gained a minor 0.3%. The ASX closed at a new nine-week high on Wednesday as banks and tech stocks made strong gains, closing up 0.5% to 7377.9 points. Commodities continued to support AUD strength after closing out another session in the green with both Gold & Iron ore up 0.5%, and Silver fell short up 0.4%. Commodity prices have faced upward pressure and concerns over global supply chain disruption. This, in turn, has warranted stronger AUD movements and support amid an absent economic docket. It was a slow day for any macroeconomic releases on Wednesday and an even quieter day ahead with attention shifting toward the Northern Hemisphere this evening.

USD

The AUDUSD pair remained relatively rangebound throughout the overnight session before gaining momentum to trade at highs of 0.7506 before coming back down to trade at 0.7497 this morning. Wall Street pushed stocks and treasury yields down on Wednesday afternoon. All three major US Equities declined more than 1% with both the Dow Jones & the Nasdaq down -1.3% while the S&P 500 was down -0.9%. U.S yields edged lower with the 10-year returning to 2.32%. Oil rose on the prospect of new sanctions on Russia as well as a decline in US inventories, with WTI up 0.9% to $110.21 a barrel. An absent economic calendar has kept focus maintained on progress in the Russia-Ukraine peace negotiations, albeit diplomacy. Looking ahead in the US, US Markit PMIs for March may provide a preliminary read on manufacturing activity for the month and may contain insight to the impacts of recent commodity prices.

EUR

The AUDEUR pair enjoyed further gains in the overnight session having appreciated as high as 0.6815 before trading at a rate of 0.6810 at the time of writing. European Equities fell on Wednesday as investors continued to weigh risks from the war raging in Ukraine and record inflation readings, both the CAC and the DAX closing out the session -1.3%. In early data, EU Consumer Confidence for March printed at -18.7, down from -8.8 and below expectations of -12.9. Limited reaction from the market. Investors will be waiting for the European Union summit today, which will also be joined by US President Joe Biden. The central attention of the meeting should likely be attributed to Russian Oil and the dependency on oil imports. Apart from this, investors will focus on Manufacturing PMI prints for the Eurozone later this evening.

GBP

The AUDGBP pair continued to advance to key areas overnight as the pair traded to a 14-month high of 0.5683 before trading at 0.5676 at the time of writing. The FTSE 100 fell on Wednesday as oil prices increased, renewing inflation fears. At the close, the London benchmark dropped 16 points, or 22% at 7,460 points. In the event on Wednesday, UK inflation climbed to a new 30-year high, rising 6.2% in February up from 5.5% in January, with energy bills and fuel prices the major drivers.  Attention will now turn toward remarks from BoE Governor Bailey who will be appearing at the EU summit later this evening and the UK BoE Cunliffe owes the market an explanation for why he dissented against a rate hike in the recent policy decision.

NZD

The AUDNZD pair continues to push higher and printed a fresh intra-day high with the pair trading at a rate of 1.07514 at the time of writing. In the absence of macroeconomic data the Kiwi has held up reasonably well despite a riskier environment. Both currency pairs have been relatively rangebound and have traded among the other as commodities rally, the NZD seems to be latching on to any thread of positivity. A lack of local data overnight should have market participants shift their focus toward PMI data and the European Union Summit.