AUD Fortunes Flip Flop on Trade War Headlines

AUD

The AUD is down against all majors, as risk sentiment continues to flip-flop on fears of a US recession, pending global tariffs and a reduced chance of a ceasefire in Ukraine. Asian equities followed suit, with ASX closing -0.5%, Shanghai Comp -0.4% and Nikkei -0.1%. Investors instead flocked to commodities, seeing an overall increase with major movers being Sugar +2.1%, Copper +1.5% and Wheat +1.4%. No major economic data releases out of Australia or China this weekend, however Chinese Industrial Production y/y and Retail Sales y/y will release on Monday 1pm.

USD

The AUDUSD opens down at 0.6284, dropping from yesterday’s highs of 0.6334, as growing fears of a US recession seeing markets move towards perceived safe-haven trade in the USD. Wall Street mirrored these fears, with the Nasdaq closing -2.0%, S&P500 -1.5% and the Dow Jones -1.4%. Last night, monthly PPI released flat and Core PPI at -0.1%, below expectations of +0.3%. Additionally, Unemployment Claims released around expectations at 220k. These inflation numbers will be key to the US Federal Bank’s interest rate decision next Thursday. Tonight will see University of Michigan Consumer Sentiment and Inflation Expectations, which is a leading indicator for economic confidence.
 

EUR

The AUDEUR opens at 0.5790, dropping below 0.5800 for the second time this week. The Euro continues strengthening due to increased confidence in the European economy, confidence partially founded in the rearmament drive amongst European nations. The DAX and CAC still closed slightly down, at -0.5% and -0.6% respectively. European Industrial Production m/m and Italian Quarterly Unemployment Rate released last night above expectations, at  +0.8% (exp. +0.5) and +6.1% (exp. +6.2%). Today will have minor German inflation data, however the German ZEW Economic Sentiment releases next Tuesday at 9pm – which usually has a high impact on the financial markets.
 

GBP

The AUDGBP opens at 0.4852, falling back to 5 year lows again after yesterday’s highs of 0.4884. Similar to the EUR, recent GBP strength is partially based around the rearmament drive designed to offset the perception that the US is no longer a reliable ally in a hypothetical conflict with Russia. The FTSE survived the global sell-off of equities, closing flat last night. Last night was a quiet night for English economic data, with only RICS House Price Balance releasing below expectation at 11% (exp. 20%). Tonight will see monthly English GDP released at 6pm, with current expectations seeing an improvement of +0.1%. If GDP meets expectations, it will be the first 3 consecutive months of positive growth since 2021.
 

NZD

The AUDNZD opens at 1.1025, trading sideways between 1.1000 and 1.1036 since Tuesday this week. This morning saw minor manufacturing and food data released out of New Zealand with muted effects on the markets. No other news over the weekend. There will be the BusinessNZ Services Index on Monday morning, which will indicate the overall business confidence in the Kiwi Economy.