AUD Surrenders Recent Gains as Risk Takes a Hit
AUD
AUD was red across the board in a difficult last 24hours in which risk sentiment took a hit and reports of warning shots fired in the ongoing Taiwan/China standoff sent tremors through markets. Asian equities were mixed on Tuesday with the Hang Seng falling 0.5% and Nikkei rising 1.1%. The ASX closed 0.5% higher with energy driving the gains. Commodities were relatively weak with Gold and Silver both in the red, while Iron Ore in the green gaining 0.3%. To the local data and Building Approvals data came out yesterday at -17.2% which was a catastrophic difference from its -3.1% forecast. Looking ahead for the day there is a string of lower tier construction data as well China PMI data which is expected to stay weak as heatwave, drought and resurfacing Covid-19 outbreaks have wreaked havoc on industrial activities.
USD
High volatility for AUDUSD overnight seeing 1 cent moves, AUD finishing off worse for wear now back at the bottom of its 6 week range at 0.6856 this morning. Wall Street again losing ground ( 1% type loses ) as US data beat expectations, keeping calls for continued rate hikes intact. US Consumer Confidence for August printed at 103.2, up from 95.3 and easily higher than expectations of 98.0. July JOLTS Job Openings rose to 11.239 mio, up from 11.040 mio and above expectations of 10.375 mio. Headlines then that the US and Iran has reached an agreement to revive the old nuclear deal and would allow Iran to begin exporting oil. Crude oil extending losses to more than 6% with the commodity currencies under further pressure. Looking ahead to tonight we have big potential movers for the US with FOMC member talks as well ADP Non-Farm employment changes.
EUR
AUDEUR also open down at 0.6839 this morning, which is over 1 cent lower than its 24hour high of 0.6935 in what was volatile trading conditions. European equities had a mixed performance with CAC down and DAX up as risk sentiment swayed with the news of shots fired at a Chinese drone by Taiwan. To the data and German national CPI for August was as expected at 0.3% and well down on previous sky-high monthly number of 0.9%. Meanwhile, Euro-zone economic confidence fell to 97.6. Looking ahead, and Flash estimates for the Eurozone inflation are due today and are set to show prices jumped by 9% from a year earlier in August, the most on record. Record energy prices in the region due to reduced supplies from Russia raise concerns that inflation will stay elevated while energy-dependent sectors including fertilizer and glassmaking constrain output. We also have a string of CPI and GDP data coming out from France and Italy which could help strengthen the Euro dollar's onslaught of prolonged weakness.
GBP
AUDGBP is in the red sitting at 0.5881 having traded similarly to AUDUER but with less volatility. The FTSE 100 has retreating even further from its previous 2 week high with a 0.9% loss on close yesterday. There is a risk off sentiment coming out of UK as Citi economists forecasted inflation to surge to 18.6% by the start of 2023 due to soaring wholesale gas prices. There was little economic data coming out from Britain last night with BRC Shop Price Index seeing a 0.7% increase from its previous output. Looking ahead to today we have Nationwide HPI m/m as well as Final Manufacturing PMI data.
NZD
AUDNZD took a hit seeing highs of 1.1249 yesterday before opening at its current low of 1.1179. There has been little to no noticeable economic data that has come out of New Zealand since last week. Earlier this morning Building Consents came out marginally above previous, sitting at 5.0% and later today we have ANZ Business Confidence.