AUD Benefits from Respite Accross Global Equities
AUD
The Australian Dollar trades higher this morning and hit a two-day high across most majors as risk appetite improved at the end of the week. Asian Equities finished Friday’s session higher with the Nikkei up +1.2% while the Shanghai Comp gained +0.9%. The ASX 200 rose 0.8% on Friday, taking its weekly gain to 1.6% as the benchmark snapped up a two-week losing streak. There was little to report on domestically with market participants likely to have focused on the Friday evening speech from the Reverse Bank Australia Governor. Governor Lowe stated that he does not expect a recession in Australia but acknowledged that there is a narrow path back to low inflation. To the data ahead, it’s a quieter start to the week with the economic calendar domestically showing May’s Retail Sales numbers due Wednesday. A strong retail beat should boost the case for another aggressive move by the RBA in July’s meeting.
USD
AUDUSD pair attracted some buying on the last trading day of week and moved further away from its recent lows. The pair maintained some positive bid tone to trade at 0.6952 this morning. US Equities climbed on Friday as inflation expectations were seemingly easing, the Dow Jones climbed +2.7%, with the S&P 500 up +3.1% and the Nasdaq Composite closing higher at +3.3%. The US 10-year yield rose 6.6 basis points to 3.14% after touching 3.49% last week. Little in the way of data on Friday, the final University of Michigan Sentiment Survey for June was released. The headline result was revised down to 50.0 from 50.2 with downward revisions to Current Conditions as well as short and long-term inflation. We then heard from the Fed’s Bullard who said the US economy has shown tremendous resilience, and from the household side we have not seen signs of pullback and continued by saying that rate hikes are going to slow the economy to a ‘trend pace’ of growth. There is little data to report on domestically, US attention will likely continue to be on how the Federal Reserve evaluates the current outlook between high inflation and recession fears.
EUR
AUDEUR bears halted their offers on Friday as the pair seemingly reversed its recent downward trend to trade higher this morning, trading at a rate of 0.6579 this morning. European Equities rallied the most since mid-March as dip buyers retuned, enticed by optimism around potential easing inflation. The German DAX closed +1.6% and the French CAC gained +3.2%. There was no macroeconomic data on Friday with traders likely maintain their focus on recent ECB speak on Friday evening. ECB Vice President Luis De Guindos crossed the wires and said that it was possible to see negative growth in the Euro area in 2023. Regarding inflation, de Guindos noted that inflation could continue to rise in the coming months before starting to fall in the fourth quarter. To the data ahead, it’s a quiet Monday before German Consumer Climate as well as ECB Lagarde speak overnight.
GBP
AUDGBP flirted with the 0.55 figure as the pair trading as low as 0.5604 on Friday before gaining positive momentum, trading at a rate of 0.5657 at time of writing. FTSE 100 closed firmly higher on Friday as the market decided to stage a decent rebound. The London Benchmark closed +2.68% in the green. In macroeconomic news, market research group GfK said its consumer confidence index fell to another record low of -41 in June from -40 in May. Economists had expected an unchanged reading. Consumer mood is reportedly darker than in the early stages of the Covid pandemic and even the shock of the 2008 global financial crisis. More importantly, UK Retail Sales fell by -0.5% in May after rising +0.5% in April. There is little data to start the week out with a softer UK economic data calendar, participants will likely be looking elsewhere for directional bias as well as evaluating impeding recession fears in the UK.
NZD
AUDNZD followed suit among its peers to trade higher this morning with the pair trading only a few pips below the 1.10 handle, trading at 1.09962 this morning. In the midst of a weaker economic calendar, the Kiwi pair has cheered the recent US dollar weakness last week as recession fears mounted and risk appetite improved. Into the week ahead, the New Zealand economic docket will feature ANZ Business Confidence, ANZ Consumer Confidence, and Building Permits.