AUD Starts the Week on the Front Foot

AUD

The Australian Dollar gained positive traction on Friday evening and followed through to this morning’s open as we trade higher across most majors. Asian Equites closed out the session in the green on Friday with the Nikkei up +0.7% and the Shanghai Comp gained a modest +0.2%. The ASX share market capped another week off with a strong performance, the ASX 200 gained +1.1% to 7,183 points. Commodities were largely positive with Gold, Silver, and Iron Ore all posting gains. In the event on Friday, Australian Retail Sales for April rose by 0.9% as expected, marking a rise for four consecutive months, depicting the resilience of consumers, albeit a higher inflation reading, around 5.1% in the Q1. To the data ahead, it’s a quieter start to the week before a busier day on Wednesday with the Australian domestic docket featuring GDP Q1 data being key data of note.

USD

AUDUSD reclaimed the 0.7100 figure on Friday and pushed higher to print 3-week highs at 0.7159 and now currently trades at a rate of 0.7159. A combination of factors supported the recent AUDUSD strength, the cross continuing to draw support from the recent RBA’s hawkish signal for bigger interest rate hikes as well as broader US dollar strength appearing to top out, contributing to upside for AUDUSD. US Equities finished the week largely in the green with the Nasdaq up +3.3%, the S&P gained +2.5% while the Dow Jones closed up +1.8%. Little in the way of any market moving data today as the US enters a Bank Holiday (Memorial Day). A relatively busier week ahead with the Fed Reserve’s Beige Book on Wednesday, Non-farm payrolls on Friday as well as several FOMC participants making public remarks throughout this week.

EUR

AUDEUR gained on Friday to reclaim the 0.66 handle, climbing to a one-week high of 0.6683 before coming back to trade at a rate of 0.6667 this morning. European Equities advanced on Friday to close the session in the green with both the DAX and the CAC gaining +1.6% on the close, and the Eurostoxx 600 index closed 1.4%, its highest level since May 3rd. On Friday, during the European session, the Bundesbank President and ECB member Joachim Nagel said that he believes the first-rate raise move should come in July, with more to follow in the second half of 2022. Little reaction to the data. Looking ahead, there’s a flurry of macroeconomic releases this week with Eurozone docket featuring EU CPI, GDP as well as Eurozone Manufacturing PMIs from Germany, France and Italy.

GBP

AUDGBP followed suit to trade higher on Friday with the pair reaching five-day highs at 0.5674 before trading at a rate of 0.5666 at the time of writing. The London Benchmark FTSE 100 closed ahead at the end of the week as investors kept the index above water, the index added 0.27%. In lower tier data on Friday, the Commerce Department reported that the Fed’s preferred inflation gauge, the Core Personal Consumption Expenditure (PCE) rose by +4.9%, in line with estimations but lower than the expected 5.2% In March. UK’s Prime Minister Boris Johnson commented that the UK could avoid recession in the months ahead, despite UK’s last inflation report, up 9% at 40-year highs. Little in the way of any macroeconomic releases to start the week until some headline UK PMIs on Wednesday.

NZD

The AUDNZD managed to trade higher at the end of the week after shaking off the recent dip from 1.100 on Wednesday and now trades at a rate of 1.0964 this morning. A lack of any domestic releases/events may offer a dull start to the week and will likely have both pairs looking elsewhere for fresh impetus, Australian Q1 GDP figures as well as US non-farm payrolls being the two key data mentions this week.