Risk-Off Drags AUD Lower
AUD
The Aussie Dollar starts the week lower against the majors, dragged by underperforming commodities and softened risk sentiment, unable to maintain the gains from the RBA’s hawkish rate cut last week where Governor Bullock stated that the Board remains cautious on prospects for further easing. Commodities closed in the red with Gold -0.2%, Silver -1.6%, Iron Ore -1.2%, and Copper -1.6%. Asian rebounded to end the week, the Hang Seng up 3.9%, the Shenzhen +1.3% and the Nikkei +0.3%. The ASX closed -0.3% with consumer services & discretionary sectors underperforming. It will be a quiet week ahead for any Aussie data releases with the main event this week being our CPI y/y which is forecast to increase slightly from 2.5% to 2.6%. The next RBA interest rate cut isn't fully priced in until July.
USD
The AUDUSD coupling opens lower to start the week at 0.6365 with the AUD falling off the back of a drag in commodities and shifts in global risk sentiment. Over the weekend, Flash PMIs indicated US business activity growth came close to stalling in February, as a renewed fall in services output offset faster manufacturing growth. The upturn in manufacturing output was also in part linked to the front-running of tariffs, hinting at merely a temporary boost. The Flash Services PMI printed at 49.7 signaling the first contraction of the sector for 25 months, representing a sharp contrast to the robust expansion seen late last year. US equities also saw a pretty big hit, closing in the red with the Dow Jones and S&P 500 both -1.7%, while the NASDAQ closed -2.2%. Nothing set for release for the start of the week out of the US, with the next major release being CB Consumer Confidence early Wednesday morning.
EUR
AUDEUR starts the week off lower at 0.6078 after some mixed Manufacturing and Services PMIs from the Eurozone on Friday evening. The Services PMI missed forecasts, now at a 3-month low of 50.7, while the Manufacturing PMI exceeded expectations at 47.3. German Federal Elections also occurred over the weekend with exit polls showing German Conservatives set to win election with 28% of the vote. Eurozone equities closed mixed with the DAX -0.1%, and the CAC +0.4%. Looking at data releases later this evening at 8PM we will get the German ifo Business Climate forecasted to increase to 85.9 from previous 85.1.
GBP
AUDGBP opens lower to start of the week at 0.5037 despite Friday’s Flash Manufacturing PMI missing forecasts, coming through at 46.4 from 48.5 indicating the sharpest decline in private sector employment since November 2020. Meanwhile higher levels of service sector activity helped to offset a solid reduction in manufacturing production with UK Services PMI jumping to 2-month highs coming through at 51.1 from forecasts of 50.8. The FTSE ended the session flat. It will be a quiet week for UK news with only minor releases. There are a couple of MPC Members speaking this evening.
NZD
AUDNZD opens the week off lower, losing its 1.1100 handle to start today at 1.1070. Nothing of note over the weekend from our Kiwi neighbours, however, earlier this morning we had their Retail Sales q/q which showed an improvement in the December 2024 quarter, coming through higher than forecasts at 0.9% from 0.5% with the biggest industry movements being electrical goods up 5.1% and accommodation up 7.6%. Core Retail Sales q/q also saw a boost up 1.4% from forces of 0.2%. Later this arvo at 1pm we will also see the release of their Credit Card Spending y/y with no current forecasts available.