Market Optimism Supportive of AUD
AUD
The Aussie dollar has soared higher against all of the majors overnight as a positive mood in equity markets spurred on the risk sensitive AUD, even with China out for the Lunar New Year shutdown. The Nikkei finished the session up 1.3% and the ASX closed Monday’s session +0.1%, kept afloat by gains across the energy and technology sectors. Commodities weren’t the driving factor as Gold and Iron Ore gains were kept limited to 0.1% on the day. There was no data domestically or from Asia yesterday, but didn’t discourage the Aussie dollar from seeing green across the board. Ahead will data start to warm up, with local Flash Manufacturing and Services PMIs as well as NAB Business Confidence before the headline CPI data tomorrow.
USD
The AUDUSD taking another stride upwards overnight with volatility continuing to take hold of markets, up to 0.7027 currently. Another strong night for risk sentiment with the NASDAQ trading +1.5%, the S&P 500 +0.8% and the Dow Jones +0.4% closing out the session. US 2- and 10-year yields both ticked 5 bps higher while crude oil rose 0.3% to $81.40 a barrel. The only piece of data to drive markets was the Consumer Boards Leading Index which fell short of the -0.7% expectations, posted at -1.0%. PMIs are on the agenda globally today with the US set to release Flash Services and Manufacturing in the early hours tomorrow. The Richmond Manufacturing Index also pending for release tomorrow morning, expected to remain negative at -5.
EUR
The AUDEUR jumped over half a per cent this morning and climbed as high as 0.6474 before settling back at 0.6462 right now. European Equity markets were taking modest gains by the closing bell with DAX and CAC both taking +0.5%. There was commentary from multiple ECB speakers overnight. ECB’s Stournaras said rate hikes needed to be more gradual with Visco echoing these comments later in the morning. Kazimir said the ECB needed to deliver 2 more 50bp rate hikes, adding there is no reason to slow to pace of rate hikes while ECB’s Vujcic said that 50bp guidance from December was still relevant. The mixed bag of commentary proved to offer little support for the EUR as the overwhelming risk sentiment had the Aussie stronger. European PMIs (including French and German) will be the key economic release from the Eurozone tonight.
GBP
The AUDGBP reversed last weeks late losses and picked up over +1.5% in the overnight session, trading at 0.5659 currently. The Pound was under pressure even as recent data offered some relief that the British economy was performing better than feared. UK winter still a driving factor as cold weather puts a squeeze on the national power grid, with demand growing for energy resources. The UK’s PMIs are expected to remain contractionary with the Services expected to remain at 49.6 and Manufacturing at 45.4.
NZD
The AUDNZD continuing its recent volatility and trading higher at 1.0827 despite the vacuum of data at the start of the week. With no data yesterday or today, the Kiwi will see fresh direction when NZ releases its quarterly inflation print tomorrow. Economists expect the CPI figure to slow slightly to 7.1% from 7.2% last quarter, as hefty rate hikes delivered so far deal a blow to demand. Keep an eye out tomorrow morning.