AUD Charging Higher into the Weekend
AUD
The AUD surge continues on its northbound run, trading higher against all major pairs – even testing and holding against some significant technical levels. Australian PMIs showed gains in both services and manufacturing, according to preliminary March data, increasing to 57.9 and 57.3 respectively. Asian equities were mixed on Thursday’s close with the Hang Seng -1.0% and Nikkei +0.25%. The ASX finished the session +0.1% higher, with energy and utilities stocks pushing higher. A likely reason for the Aussie demand in recent days has been strong performance in the commodities sector, Iron Ore leading the charge to gain +2% though Gold was just off the mark losing -0.1%. An absent Australian economic docket leaves Aussie traders adrift today, but with optimism and the current risk-on tone in markets, plenty of attention will be on the local Dollar.
USD
The AUDUSD reaches fresh year-to-date highs overnight against the Greenback, touching a high of 0.7527 overnight before settling to trade at 0.7510 this morning. Risk-free money continues to strengthen with US Bond Yields driving alongside a positive session from Wall Street. The 10 Year gained 6bps to resume at 2.35%, whilst the 2 Year put on 3bps. North American equity indices remained well supported into the close with Wall Street extending what has been a volatile month, the NASDAW up +1.9%, the S&P 500 +1.5% and the Dow Jones +1.0%. Unemployment claims lowered to 187,000, a decrease of 28,000 from the previous week's revised level. This is the lowest level for initial claims since September 6, 1969 when it was 182,000. US President Biden on the wires after meeting NATO leaders in Brussels. He said that there would be further information to come in regards to energy security and he was determined to build on existing efforts in Ukraine. Important to note with the ongoing energy crisis - the rally in oil prices hasn’t deterred the Fed’s hawkishness. San Francisco’s Mary Daly (a centrist) said both a 50 basis-point interest-rate hike and a decision to shrink the balance sheet could be warranted at May’s FOMC meeting.
EUR
The AUDEUR is yet to take a backwards step as it continues to climb up to 0.6827 this morning, approaching similar highs of 0.6864 seen earlier this month, which could be a barrier to be tested if the AUD continues on this path. There has not been any market-moving news on the geopolitical front, with the Russia – Ukraine war still underway. US President Joe Biden and European NATO counterparts are preparing for the risk of Moscow launching a nuclear attack, whilst also discussing assisting Ukraine with anti-ship missiles and clarified that any gold transaction involving Russia's central bank is subject to existing sanctions. The Euro saw some brief strength as a result of stronger than forecast flash Eurozone PMI figures for March, with German data coming in with Services 55 (53.7 expected) and Manufacturing 57.6 (56 expected). Meanwhile, the number of new coronavirus cases, blamed on the Omicron BA.2 variant, are on the rise in Germany, the UK, France and Italy, the top European countries suffering from this new wave. So far, no restrictive measures have been put in place, but on the contrary, the latest of restrictions is being lifted. Today’s Eurozone economic docket will unveil March’s IFO Business Conditions and Expectations for Germany.
GBP
The AUDGBP also legging up to trade at the highest level since early January 2021, currently trading at 0.5698, testing 0.57 in the early hours of the morning. The UK economic docket yesterday featured the March Composite PMI which dipped to 59.7 vs. February’s 59.9 figure, though higher than the expectations of 57.8. The pressure continues on the Pound after last week's dovish assessment of the Bank of England policy decision and its view around the need for future rate hikes. Looking ahead, the UK will release February Retail sales data, though it is likely to take a back seat with the UK’s attention firmly remaining on Ukraine/Russia, with London announcing 65 additional sanctions against key Russian industries and individuals overnight.
NZD
The AUDNZD caps off the impressive run also improving against our Kiwi counterparts, sitting at 1.0792 this morning. Aussie strength looks likely to be the differing factor over the NZD, with little macroeconomic data coming out of New Zealand to move currency markets. Although, New Zealand and Australia have finally agreed to resettle 150 refugees stuck in Australia's offshore detention system per year for three years, finalising a deal first made nine years ago. No reaction from currency markets, with direction coming from Europe and NA as the economic calendar is empty to end the week.