AUD Unwinds Gains on Sentiment Shift
AUD
The Aussie Dollar sheds most of the gains from the past few days after increased tensions in the Middle East saw risk-sensitive currencies, like the AUD, take a hit. Commodities saw a mixed performance yesterday, with Oil closing down 1.1% Gas down 0.9%, Gold up 0.2% Silver up 0.1% Iron Ore down 1.1% and Copper up 1%. Asian equities saw minor gains, with both the ASX and SHANGHAI COMP gaining 0.1% into the close. RBA Assistant Governor Hunter spoke yesterday, mentioning a rebound in consumption in December quarter was not just a temporary increase, stating that the RBA Board is more cautious than the markets with a threat of inflation still looming for Australia. CB Leading Index m/m came in at 0.5%, previously 0.4% and later today we will have the MI Leading Index m/m set for release, previously 0.1%. Traders will be focused on tomorrow’s employment report, where a strong report may show there could be a boost in consumer spending on the horizon, lifting inflation.
USD
The AUDUSD sees a retrace of yesterday gains, falling in the overnight session, opening this morning at 0.6358 after increased tensions in the Middles East saw markets flock to the USD, with risk-sensitive currencies taking a hit. Wall Street fell with the DOW JONES down 0.7%, S&P 500 down 1% and the NASDAQ was down 1.8%. It was a quieter day for US data, with only notable data being the Industrial Production m/m coming 0.5% over the 0.2% expectations, previously 0.3%. The FOMC Federal Funds Rate will be announced tomorrow morning, with forecasts for a hold at 4.50%. The following FOMC Economic Projections and Statements, which will look to be the movers, as markets are currently pricing in three rate cuts this year. However, with recession concerns and potential inflationary tariffs uncertainty, a hawkish undertone in the commentary could lead to further US strength.
EUR
The AUDEUR falls off over the past 24 hours, dropping to nearly the 0.58 barrier earlier this morning, opening at a rate of 0.5811. European equities see solid gains into the close, with the DAX closing up 1% and the CAC up 0.5%. German ZEW Economic Sentiment read at its highest result in 3 years, coming at 51.6, expected to grow from 26 to 48.1. This is following the huge stimulus packages being talked about in Germany to force growth in the nation, with now 1 trillion in spending being considered over the next decade. Tonight, we will see Final CPI y/y and Core to be released, with the Core expected to remain unchanged and the Final CPI y/y expected to lower from 2.5% to 2.4%.
GBP
The AUDGBP opens the day lower, with the pair dropping through the 0.49 barrier overnight, opening this morning at a rate of 0.4892. There was no news out of the UK yesterday, and nothing out tonight with a data dump looming tomorrow, with the key piece being the Official Bank Rate; expected to remain at 4.50%.
NZD
The AUDNZD continues to fall overnight, falling to a 5-month low, opening this morning at a rate of 1.0933. The GDT Price Index came in flat this morning, down from 0.5%, Westpac Consumer Sentiment dropped from 97.5 to 89.2. Current Account came in 0.36B higher at 7.04B, previously at -10.84B. There is no news out for the rest of the day, with all eyes on tomorrows GDP q/q, looking to grow from -0.1% to 0.4%.