Friendless AUD Continues South
AUD
The Aussie dollar rounds up what has been a dismal week with continued southbound pressure, with the AUD failing to hold on any resemblance of support against most majors overnight, with the Euro the only exception. Asian equities are still in a hole as they remain pressured by strong inflation data out of the US last night (see more in USD section). The Hang Seng was the worst performer down -2.2%, the Nikkei losing -1.8%. The ASX fell -1.75% on Thursdays close, with tech down 8.7%. Aussie commodities were relatively unchanged with Gold and Iron Ore, a touch off the mark both down -0.1%. China’s coronavirus concerns and the fear of an economic slow-down continue to supersede the impact of the daily data releases. Saying that, it’s a light calendar to end the week off domestically, with more substantial Jobs data released prior to the election.
USD
The AUDUSD climbing further down into the basement to similar levels seen last during early covid-era, sitting at 0.6865 at time of writing. Wall St clawed back its losses late in the session with the NASDAQ closing flat on the day while S&P 500 finished -0.4%. This takes the NASDAQ’s 6 day move to -12.7%, while the S&P 500 is -10% for the same period. US PPI for April printed at 0.5% MoM as expected and 11.0% YoY, higher than expectations of 10.7%. Also released were weekly unemployment claims data which was mixed with initial claims slightly higher than expected, 203K instead of 190k, though continuing claims were lower than expected. It would be justified to claim that the US dollar index (DXY) is ruling the FX domain backed by a higher US Consumer Price Index (CPI) and its safe-haven appeal, with the DXY climbing above 104.50 overnight refreshing 20-year highs. Looking forward will see the release of Preliminary Consumer Sentiment data assessing confidence in future market conditions, but will not outweigh concerns in China.
EUR
The AUDEUR the only major pair that managed to buck the trend, trading slightly higher than yesterday morning to sit at 0.6614 currently. European equity markets managed to pare some early losses though still closed in the red with the FTSE closing down 1.5% while the CAC lost 1.0% and the DAX was 0.6% weaker at the closing bell. The ongoing situation in Ukraine and lack of action from the ECB to get ahold of inflationary pressures is largely weighing down the Euro whilst keeping the Aussie afloat. ECB economist and Governor of Irelands Central Bank Makhlouf hit the wires, saying the ECB has reached the point where it needs to act, stating that net asset purchases should end in June or July. German politician Habeck commented that Germany is prepared for Russian gas sanctions, with Russian gas cuts equating to 3% of German imports. Later today will see some second-tier data released ahead of another light calendar next week.
GBP
The AUDGBP seeing red and losing out even with some meek data out of the UK, trading at 0.5623 this morning. The UK’s economy contracted in March with GDP falling by -0.1% m/m (0.0% expected), whilst Februarys GDP was revised down from +0.1% to 0%. That said, the UK’s first readings of the Q1 2022 GDP eased to 0.8% QoQ, below 1.0%. Bank of England (BOE) Deputy Governor Dave Ramsden conveyed fears of prolonged higher inflation, which in turn raised worries for economic growth. No data to end the week off from the UK as we look to gain more insight at Tuesday’s Monetary Policy Report Hearings.
NZD
The AUDNZD flirting with the 1.10 handle again, losing out on the position last night to trade at 1.0995 at time of writing. The Kiwi has suffered in a similar rhetoric to the Aussie as most commodity currencies feeling the pain of Chinese lockdowns. Business NZ PMI dropped to 51.2, below 52.8 market forecasts and 53.8 prior, in April. The softer report represents a shift in tone from the previous day’s upbeat inflation expectations from the Reserve Bank of New Zealand (RBNZ) that raised concerns about the Kiwi central bank’s widely chattered 50 basis points (bps) of a rate hike in June.