Heightened Geopolitical Tensions Drive Safe Haven Flows
AUD
The Aussie Dollar turned lower on Friday evening after increased military action in the Middle East soured global risk sentiment. Commodities also took a hit, with Gold closing down 1.3%, Silver down 1.7%, Iron Ore down 1.1% and Copper managing to close up 0.1%. There was no relief in the Asian equities, with the ASX down 0.3% and the Shanghai Comp down 0.5%. To the news, Chinese New Loans came out on Friday night lower at 3090B, expected at 3700B from a previous 1450B, showing that there is growth in the Chinese economy, but it seems to be slower than expected. Looking forward, there is no local news out today, with all eyes on the Chinese data release tomorrow, including Industrial Production y/y (exp. +6.0%, prev. +7.0%), Retail Sales and GDP q/y.
USD
The AUDUSD takes another fall over the weekend, breaking through the 0.65 barrier, hitting a 60-day low, opening this morning at 0.6473. This comes after geopolitical tensions in Israel soured global risk sentiment, with markets rushing to the USD 'safe haven'. Wall Street closed the week deep in the red, with the Dow down -1.2%, S&P 500 down -1.5% and the Nasdaq down -1.6%. On Friday night we saw the Prelim UoM Consumer Sentiment come out lower at 77.9, expected at 79 from a previous 79.4; and Prelim UoM Inflation Expectations coming in higher at 3.1%, previously at 2.9%. This data is adding to the evidence that the inflation in the US is much sticker than previously thought, adding to the case to hold rates higher for longer to try and tackle it. Tonight, will be a busy night for the Americans, with the Core Retail Sales m/m expected to increase to 0.5% from 0.3%, the headline figure expected at 0.4%, previously 0.6% and the Empire State Manufacturing Index expected to increase from -20.9 to -5.2.
EUR
The AUDEUR has taken a fall since Friday, with the pair mildly gaining in the morning session, breaking through the 0.61 barrier before an overnight drop to where we open this morning at 0.6080. The European equities were soft into the close, with the DAX down 0.1% and the CAC down 0.2%. On Friday, both German and French Final CPI m/m were released, both coming in as expected of being unchanged at 0.4% and 0.2% respectively. Today we have the Industrial Production m/m set to be released, expected to increase from -3.2% to 0.8%.
GBP
The AUDGBP shifts lower since Friday, with the pair grinding down lower, breaking through the 0.52 barrier on Friday night, opening this morning at 0.5194. The British equities saw a strong finish to the week, with the FTSE closing up 0.9%. To the news, on Friday the GDP m/m was released at expectations of 0.1%, declining from 0.3%. Industrial Production m/m came out higher on Friday at 1.1%, expected at 0.0% from a previous -0.3%. Tonight, we have MPC Member Breeden Speaking around the implementation of new payment technologies, not expected to impact markets.
NZD
The AUDNZD sees a marginal shift down over the weekend, fighting to hold the 1.09 barrier, eventually dropping it, opening this morning at 1.0890. To the news, this morning we had the BusinessNZ Services Index coming in lower at 47.5, previously at 52.6. Visitor Arrivals m/m were also released, coming in lower at 0.9%, previously 7.6%. There is no further data to be released today, with all eyes on this Wednesday’s CPI q/q, expected to show an increase from 0.5% to 0.6%.