AUD Pars Losses Ahead of China Data Today
AUD
The Aussie Dollar is showing some resiliency to claw back some of last weeks losses, after sinking to two-year lows over consecutive weeks of downtrends amidst a quiet market over the weekend. Asian equities were up on Friday close, with +2.6% type gains from the Nikkei and Hang Seng. The ASX finished Fridays session +1.9%, in the third-biggest daily gain this year, with tech stocks rebounding up +6.9%. Commodities were off the mark as Gold and Iron Ore lost -0.5% and -0.6% respectively. Looking forward, Chinese data is realease with April Retail Sales and Industrial Production, as well as comments from the National Bureau of Statistics (NBS). Given the covid resurgence in China, the headline numbers are likely to arrive softer-than-prior, which in turn can weigh on the AUD, coupled with the latest geopolitical fears emanating from Russia.
USD
The AUDUSD reversed its recent poor run of form to gain against the US Dollar to trade at 0.6940 at time of writing. Wall St rebounded strongly on Friday with the NASDAQ closing +3.8% while the S&P 500 closed the day +2.4% higher. The Greenback was rattled by data released on Friday, which showed University of Michigan's Consumer Sentiment Index fell to 59.1 in May from 65.2 in April, the lowest reading since 2011. Markets suggest there are no shortage of factors to blame for the decline in consumer sentiment, from inflation to rising interest rates and financial market instability. Tonight, we’ll hear from the Manufacturing industry as the Empire State Manufacturing Index from US is released, a leading indicator of economic health as a survey of 200 manufacturers asks about relative level of general business conditions.
EUR
The AUDEUR on the up as well to continue the Aussie’s overall strength against the Euro in recent months, sitting at 0.6669 this morning. European equities closed the Friday session with large gains with the FTSE and CAC closing up around +2.5% while gains elsewhere were either side of 2.0%. European Central Bank (ECB) Governing Council member Mario Centeno said on Friday that the ECB should begin an interest rate hike cycle in early July, and he called for any withdrawal of stimulus to be done gradually. “There are currently no structuring signs of de-anchoring inflation”, he said, acknowledging that the balance of risks around inflation is skewed upward after Russia's invasion of Ukraine. Later tonight the EU will release their ‘economic forecasts’ for the next two years, and serves the purpose of evaluating economic performance and trends of EU member states.
GBP
The AUDGBP finding a leg-up against the Britts as Brexit angst holds the Pound back, the currency pair trading at 0.5664 this morning. It was reported that the UK government is expected to reveal a plan to unilaterally change the Northern Ireland protocol, with reports that British PM Boris Johnson saying he wanted to resolve a standoff with the European Union over Northern Ireland's post-Brexit trade rules, but he kept open the option of unilateral action that the EU says could start a trade war. Main focus for the trading pair will be tonight’s UK Monetary Policy Report hearings – the Bank of England will testify on monetary policy before the British parliament.
NZD
The AUDNZD starting the week off higher despite a quiet weekend both locally and in New Zealand, resuming and finding comfort around the 1.105 figure. With a light economic calendar to start the week off both currencies will be taking impetus from Chinese data today, with both risk-averse and commodity dependant currencies hoping for some better than expected data out of Shanghai.