AUD Comes Off the Highs as Commodity Prices Stall
AUD
The AUD had a marginal pull back overnight with commodity prices, gold and copper reversing sharply in the overnight session, shifting the commodity-backed Aussie. Asian Equities were hit hard across the board with the Nikkei taking a dive of -2.9% while the Shanghai Comp fell -2.2%. Australian shares closed lower on Monday, the ASX200 dropped 0.1% to 7038.6 points. Commodities had taken a dive overnight with copper down -4.1% and Iron Ore followed suit down -3.4%. The VIX, which is an index that measures the level of risk and fear in the market, was trading at 36.47 (+13.96%) a month high and illustrates caution engulfing markets. Little in the way of local data for the Aussie today aside from NAB business confidence survey. Commentary for RBA Governor Lowe this week will be in focus on Wednesday. This will dictate a likely interest rate decision by the RBA in the coming monetary policy meeting.
USD
The AUDUSD pair slipped from the 0.74 handle having reached highs of 0.7429 overnight before coming back down to trade at 0.7312 this morning. US Equities fell sharply overnight with the Nasdaq heavily in the red at -3%, while the S&P 500 was -2.4% and the Dow dipped -2%. Brent crude surged to $139 a barrel, its highest level since 2008, after Blinken said Washington was in discussions with European governments about banning imports of Russian crude and natural gas. US yields edged fractionally higher with the 10-year note returning 1.76%. A lack of local data has seen markets maintain their focus on the Russia-Ukrainian War and the prospect of further bans on purchases by Russia. Looking ahead, US CPI data on Thursday and Consumer Sentiment on Friday will be the key focus for macroeconomic releases.
EUR
The AUDEUR pair gapped up into the 0.68’s in early trade on Monday, reaching a five-year high of 0.6846 before dipping, trading at a rate of 0.6736 this morning. European Equities closed the session in the red with the DAX down -2.0% and the CAC dipped -1.3%. Little in the way of data overnight with Sentix’s index of EuroZone investor confidence fell to -7.0 in March from 16.6 previously, hitting its lowest level since November 2020. The EU has announced its aim to cut dependence on Russian gas by -80% in 2022. In the absence of macroeconomic data, markets are fixated on the price of oil which is the current driver for risk in the forex space and the Euro has been suffering for it given the Eurozone dependency on Russian Oil, Coal & Gas.
GBP
The AUDGBP followed suit and rebounded from 12-month highs, trading as high as 0.5636 before trading at 0.5576 at the time of writing. The FTSE 100 fell on Monday as investors grew increasingly concerned about energy prices stemming from the Russia-Ukraine conflict would slow global economy while raising inflation. The UK index dropped 0.40% lower at 6,959.48 points, It’s lowest point in 11-months. There is no data among the releases for the pound today, which leaves market participants in heightened concerns for further economic sanctions which will inevitably hit the global cost of living.
NZD
The AUDNZD was trading lower this morning having pulled back from recent highs amid a risk-off market mood with the pair trading at 1.07181 this morning. The NZD finished last week on a higher tone despite escalation in the Russia-Ukraine conflict and an absence of market data. A lack of local macro releases this week will see traders focus elsewhere with the US docket featuring CPI data for Feb, which if rising more than estimate, could influence Fed policymakers on a rate hike larger that what’s price in.