Currencies Start the Week Quietly
AUD
The Australia Dollar was relatively subdued throughout the overnight session as it hovered among similar levels seen to Monday morning. Asian Equities capped off their day with mixed results with the Nikkei dipping -0.7% on the close, while the Shanghai Comp had next-to-no movement at 0%. Domestically, Australian shares struggled for momentum on Monday after falling to their worst week in more than two years. The ASX 200 closed down -0.6%, with the benchmark index sinking for the 7th consecutive session. In macroeconomics, there was little to report on in Australia with no market moving data. Looking ahead and to today, the Australian economic docket will feature the Reserve Bank of Australia Governor Philip Lowe speaking. Lowe is likely to reiterate the key message from his recent interviews where he highlighted that it was time to shift to normal monetary policy settings. The RBA will also release the minutes of its June meeting, at which, it decided to hike by a surprisingly 50 basis point increase, and markets wager on a similar-sized move for July as well.
USD
AUDUSD begins the week only slightly in the green as we trade only a handful of pips above Mondays open with the pair trading at a rate of 0.69609 this morning. Wall St was closed for the US holiday so a quieter session accordingly. Little to report on with no macroeconomic events taking to headlines. It’s worth noting that throughout the weekend, Fed speakers commenced crossing the wires, member Christopher Waller backed a July 75 bps rate hike mentioning that inflation needs to be brought down. Meanwhile, Cleveland’s Fed President Loretta Mester noted that inflation would not reach the Fed’s 2% target while mentioning that although the Fed’s Summary of Economic Projections foresees the US economy slowing down, she said that she’s not predicting a recession. To the data ahead, The US economic docket will feature Existing Home Sales for May, and further Fed speakers, with Richmond Fed President Thomas Barkin to cross the wires.
EUR
AUDEUR had a relatively subdued session of trade overnight with the pair reaching a high 0.6640 before trading at a rate of 0.6618 at the time of writing. European Equity markets rose on Monday following the sharpest weekly decline for equities since the pandemic began in March 2020. The French CAC closed +0.6% and the German DAX gained +1.1%. To the data overnight, Producer Prices in Germany rose at a record pace in May, marking the fastest increase since the start of data collection in 1949. PPI increased 33.6% compared with May 2021. German producer prices have climbed to a new record every month since December 2021. Furthermore, the ECB President Lagarde crossed the wires overnight, Lagarde said she expects to raise the ley ECB interest rates again in September after the 25bps hike in July, while the measure of the September hike will depend on the updated medium-term inflation outlook. To the week ahead, it’s an absent Eurozone economic calendar up until Thursday evening with the Eurozone Flash Manufacturing & Services PMIs being the key mention.
GBP
AUDGBP was quite turbulent throughout Monday, having traded as high as 0.5713 and as low as 0.5657 before coming back to trade between the two ranges at 0.5680 this morning. London FTSE 100 rose to start the week, boosted by gains in energy stocks after the index posted its third straight weekly drop las week. The blue-chip index rose +1.5% on the close. An absent economic docket had market focus on speakers as they crossed the wires overnight, with Catherine Mann saying that ‘50bps moves reduce the risks of domestic inflation, boosted by a weaker pound.’ Mann said that BoE should raise rates faster because the weakness in the pounds value is adding to inflationary pressures. In the week ahead, the UK economic docket will feature BoE Chief Economic Huw Pill and CBI Industrial Orders for June.
NZD
AUDNZD was little unchanged from yesterdays opening rates with the pair trading only a few pips below the 1.10 handle, trading at a rate of 1.09928 at time of writing. There has been little to report on domestically with an absent domestic calendar for the Kiwi, stable market conditions and an absent Australian docket has supported the antipodean. In lower tier, Consumer Confidence landed extremely low. The Westpac Consumer Survey for second quarter has been recorded at 78.7, much lower than the estimates of 100 and the prior print of 92.1.