AUD Uptrend Takes a Breather

AUD

The Aussie Dollar uptrend against the majors has paused with the exception of the Kiwi, as commodities surrendered recent gains yesterday with Natural Gas -2.9%, Wheat -3.4%, Gold -1.4% and Silver -1.5%. Asian equities also started the week in the red, the Nikkei -0.3%, Hang Seng -1.6% and Shenzhen -0.9%. The ASX 200 also fell -0.8%, dragged by materials and energy. A relatively quiet week for Australian news as nothing that is expected to move markets until CNY CPI y/y and PPI y/y releases tomorrow – a measure of inflation in China. However, the Westpac Consumer Sentiment and NAB Business Confidence will be announced from 10:30am today.

USD

AUDUSD opens at 0.6736, having briefly forging 7-mth highs yesterday of 0.6761, as markets grapple with expectations a 50/50 chance of a rate hike at the RBA's next meeting in early August. Wall St was closed slightly higher, with Dow Jones -0.1%, S&P 500 +0.1% and NASDAQ +0.3%. No news due from the US today, however with Federal Chair Powell due to testify twice later this week, as well as the release of US inflation data, things will likely heat up in the second half of the week.

EUR

AUDEUR opens slightly down at 0.6222, trading relatively tight ranges to start the week. The main European equities opened with lacklustre performances; DAX opens flat and CAC drops -0.6%. The votes from France’s snap election are being finalised, with no clear majority seemingly possible and deal-making between parties looking necessary in order to wield any semblance of useable power. In what is a quiet week for European economic data, yesterday's German Trade Balance and Sentix Investor Confidence provided mixed results yesterday and failed to move the needle. German President Buba will speak tomorrow and Italian Industrial Production m/m will be released, expecting to stay flat from past month.

GBP

AUDGBP opens lower at 0.5259 in what were quiet trading conditions. The Pound Sterling has traded a tight 1% range between 0.5287 and 0.5233 over the past two weeks despite markets needing to adjust to a new Prime Minister and party ruling in the United Kingdom. The FTSE also traded only slightly lower at -0.1%. Yesterday, MPC Member Haskel mentioned that he would vote to hold interest rates in August, which saw a minor decrease in the AUDGBP. No important UK data will be released until the GDP m/m on Thursday 4pm, which is expected to grow from 0.0% to 0.2%. At the same time, a flurry of low-level data will be released, but can also move markets if they form the same story.

NZD

AUDNZD opens higher at 1.0994, falling from the 2 month highs of 1.1000 that we saw on Friday. It’s been a slow month for Kiwi data, but their interest rate decision will be made by the RBNZ tomorrow at 12pm. It’s expected to hold at 5.50%, with an outside chance of cutting interest rates.