Gaza Peace Proposal Spurs AUD
AUD
The Aussie Dollar opens higher across the board with the risk-sensitive currency benefitting from improved sentiment off the back of preliminary ceasefire headlines coming out of the Middle East. Last night, news headlines suggested Israeli Prime Minister Netanyahu had accepted a US-brokered ceasefire agreement to be put in front of Hamas, leading to a sell-off of the USD and strength of the AUD. Equities were mixed with ASX +0.1% (utilities outperforming), Nikkei -1.8% and Shanghai Comp +0.5%. Commodities were also mixed, with the losers being Crude Oil -2.8%, Gold -0.1% and winners being Natural Gas +0.9%, Silver +0.4%, Iron Ore +0.6% and Copper +1.2%. Today at 11:15am we have China’s interest rate decisions, expected to hold at 3.35% and 3.85% for the 1-Year and 5-Year Loan Prime Rates, after a surprise 0.1% cut last month. Just 15 minutes later at 11:30pm, we have the RBA Meeting Minutes, which will follow up on Bullock’s recent comments on the RBA’s current balancing act between inflation and employment figures in deciding on their next interest rate decision.
USD
AUDUSD breaks the 67 handle at 0.6733 this morning, which makes it at 1-month highs after a large sell-off of the USD following a cooling of geopolitical tensions in the Middle East. As mentioned, peace-talk headlines were released overnight regarding the Gaza War, with Wall Street equities also rallying following the news, with Dow Jones +0.6%, S&P +1.0% and NASDAQ +1.4%. No other meaningful datasets were released from the US overnight, and tonight we’re only expecting FOMC Members Bostic and Barr to speak. More notably will be the FOMC Meeting Minutes and Unemployment figures on Thursday, which will give clues into the highly anticipated US Fed interest rate cut in September.
EUR
AUDEUR opens at 3-week highs at 0.6074, as demand of the AUD picks back up in more certain geopolitical times (with no figures out of Europe yesterday). Europe’s equities were also in the green, with DAX and CAC up +0.5% and +0.7% respectively. Today we just have the Final CPI y/y and Final Core CPI y/y numbers out at 7pm, both expected to remain unchanged from previous month, although still following its downward trend, showing promise for the ECB in bringing their inflation back to their target 2% range in the medium term.
GBP
AUDGBP follows the general trend of opening higher at 0.5182 (1-month highs) after a strong rally last night in similar fashion to the others, with little figures out from the UK yesterday. UK equities also pushed higher by +0.5%. No datasets out today, however, for this week the main event will be the Flash Services and Manufacturing PMIs on Thursday, which are both expected to continue their uptrend in expansionary territory.
NZD
AUDNZD remains flat this morning at 1.1013, despite some extremely weak trade numbers released this morning. NZ’s Trade Balance was expected to show an export excess of 331M, however in reality they imported 960M more than they exported. Little market reaction to this news, with ongoing NZD weakness after last week's interest rate cut from the RBNZ. Tomorrow, we expect a tentative release of their GDP Price Index, as well as Credit Card Spending y.y at 1pm.