Sentiment Shift Stalls AUD Resurgence
AUD
The AUD is down against all major currencies this morning. This can be attributed to deteriorating global risk sentiment off the back of escalations in the Middle East yesterday, alongside softer US manufacturing data overnight. Asian equities finished the session mixed with the Nikkei flat, Hang Seng -0.2%, and Shenzhen +0.3%. The ASX closed slightly lower -0.1%. Commodities were mostly flat, with the big movers Crude Oil (-4.3%) and Natural Gas (-3.8%). Today will bring the main AUD event for the week: GDP q/q. Markets expect weak growth of +0.2% (previous figure +0.1%), with the RBA paying particularly close attention ahead of the next interest rate decision. RBA Governor Bullock will be speaking in Sydney tomorrow. Audience questions are expected, which provide an opportunity for currency volatility if she were to give insight into future monetary policy considerations.
USD
AUDUSD opens lower this morning at 0.6713 after hitting 0.6792 highs yesterday morning before steeply dropping after reports of escalations in the Middle East. Softer US manufacturing data also caused the currency pair to drop further in the evening. The ISM Manufacturing PMI contracted for the fifth consecutive month (47.2), suggesting higher interest rates are curtailing spending, supported by the drop in New Orders pointing to further slowdown in business activity. Equities responded negatively with the Nasdaq -3.3%, the S& P 500 -2.3%, and the Dow Jones -1.5%. Tonight, JOLTS Job Openings are expected a little lower than the previous reading. Paired with tomorrow evening's ADP employment data, this will give the Federal Reserve policymakers insight into the sizing of monetary policy easing in mid-September. Any surprise results are likely to bring about significant currency volatility, with the last major US employment figures causing the AUDUSD to shoot up 1% to 0.6791.
EUR
AUDEUR opens lower this morning at 0.6077, having fallen through the 0.61 handle overnight given deteriorating global risk sentiment off the back of escalations in the Middle East. Yesterday, the Spanish Unemployment Change that came out lower than expected at 21.9k. Equities fell with the DAX -1.0% and CAC -0.9%. Tonight, we will see Final Services PMIs for the Eurozone.
GBP
AUDGBP opens lower this morning at 0.5118, falling victim to weakened risk sentiment in line with the other majors. Yesterday saw BRC Retail Sales Monitor y/y rise from 0.3% to 0.8%. The FTSE fell -0.8%. Tonight, they have Final Services PMI forecasted to stay the same at 53.3. The main UK event this week will be the Construction PMI, tomorrow.
NZD
AUDNZD opens lower this morning at 1.0851, having touched 1.0905 highs yesterday morning before falling to 1.0835 lows, then recovering a tad. This morning, the GDT Price Index fell from previous at 5.5% to -0.4%. Today, ANZ Commodity Prices m/m are forecasted to fall -1.7%.