AUD Regains Traction In Risk-On Market Mood

AUD

The Aussie Dollar rallies against most majors regaining a lot of the ground it had ceded since last Wednesday, supported by a combination of factors including a growing risk-on market sentiment and increasingly hawkish RBA minutes. In Equities the ASX moved 0.5% higher on Wednesday, spearheaded by healthcare stocks, the ASX closed at the highest level since the start of January, while Asian equities were mixed with the Shanghai Comp down 1.3% and the Nikkei fared the best up 0.9%. In Commodities Gold was up 0.2% and Iron Ore up 1.0%. Relatively quiet on the local macroeconomic calendar this week between the two long weekends, until next week’s CPI data set to release.
 

USD

The AUD/USD rallies, ascending to weekly highs of 0.7458 after rebounding from the 0.73 handle now trading at 0.7444 at time of writing. A number of factors at play resulting in bullish AUD/USD pair most heavily influenced by the RBAs minutes from the April board meeting providing a hawkish message strongly hinting that a rate hike is coming sooner than expected. RBA hawkishness alongside broad-based US dollar weakness, and more risk-on market sentiment that triggered an appetite for commodity-linked currencies. This strong positive traction against the Greenback with Bullish Pundits prepares for an assault towards the 0.75 bracket. In US market data we witnessed Existing Home Sales come in as expected at 5.77M overnight, with Crude Oil Inventories -8.0M against expected 3.0M and a previous of 9.4M. Looking ahead today we will see Philly Fed Manufacturing Index and Unemployment Claims later tonight. More important, Federal Reserve Chair Powell will be making public remarks as part of an IMF panel on the global economy later this evening.
 

EUR

The Aussie continues its rise against the Euro today trading at 0.6861 at time of writing. European Equities were largely in the green with DAX gaining 1.5% and the CAC closely behind up 1.4%. In Eurozone local data we saw German Industrial PPI YoY for March jump to 30.9% the biggest increase since records started in 1949. Italian Trade Balance came in better than expected at -1.66B against predicted -4.23B and previous of -5.13B. Industrial Production m/m was slightly below expected at 0.7% vs predicted 0.8% and a previous of -0.7%. More importantly, ECB commentary over the wires suggested that inflation returning to the 2% target was unlikely with rate hikes possible in Q3. Meanwhile, in France we have the local election picking up heat, but not having all that much impact on local European markets. On the eastern borders the Russian-Ukrainian war continues to rage on, yet Putin’s withdrawal from the Kiev area as promised but had been held with quite a skeptical ire has proven to be true which has offered a slither of positivity in the region. Looking ahead ECB’s President Lagarde is set to speak later in this evening possibly offering hints to the timing of rate hikes.
 

GBP

The AUD/GBP pair as with the other majors has found traction in a bullish run for our commodity currency currently trading at 0.5697 at time of writing. In UK Equities the FTSE much like its contemporaries was in the green, gaining 0.4%. In terms of Local data slim to none to be seen in a relatively quiet few days for the UK. Controversies over the future of the Current PM Boris Johnson still lingers in the air, yet seems to have little impact on local market. Yet looking ahead we are set to see the Bank of England’s Governor Bailey hitting the wires this evening perchance offering further insight to the central banks timing of future interest rate hikes.

NZD

The Aussie has been trading relatively sideways against the NZD over the last few days but momentarily surged to a two-year high on the back of the fastest growth in inflation data (see below) currently at 1.0980 at time of writing. In the event this morning, Statistics New Zealand reported the NZ Quarterly Consumer Prices print landed at 1.8% and a preliminary seen at 2%, up from the previous figure of 1.4% - and Inflation Rate jumping to 6.9% the fastest increase in 32 years. This has still advanced the odds that the RBNZ will continue with the spree of raising the Cash Rate. The RBNZ clearly mentioned in its last monetary announcement that the elevation of this quantitative measure is the only way to contain the recent rise in inflation.