USD Languishes on Tariff-Driven Fears
AUD
The AUD opens mixed against the majors, remaining out of the limelight as markets sell off the USD on tariff fears in favour of the Euro given improved European growth prospects. Asian equities closed higher on Wednesday, led by the Hang Seng, up +2.8%, with the Shenzhen, +0.5%, and Nikkei, +0.3%, in tow. The ASX slid -0.7%; consumer staples the hardest hit, down -3.6%. Yesterday, Aussie GDP q/q printed on-expectations at +0.6%, with the economy picking up in the final three months of the year, boosted by a revival in household spending, though the outlook remains clouded by persistent domestic inflation and mounting trade tensions abroad. Later this morning, we'll see local Building Approvals m/m and the Goods Trade Balance.
USD
AUDUSD has recovered from yesterday's near-one-month-lows of 0.6197, gaining ground overnight to open at 0.6331 as the USD languishes on tariff-driven fears and an uncertain growth outlook. Wall St. rebounded overnight with the Nasdaq trading +1.5%, the Dow Jones +1.3%, and the S&P 500 +1.2%. The ADP Non-Farm Employment Change showed private employers added just 77k jobs in February, far below expectations of 141k. The ADP report also reflected tariff concerns, as a sector that lumps together trade, transport and utility jobs saw a loss of 33k positions. Tonight's Non-Farm Jobs Report will draw attention, with the US Unemployment Rate expected to remain steady at 4.0%, as well as a +0.3% m/m uptick in Average Hourly Earnings.
EUR
The biggest three-day rally in the Euro in over two years has seen AUDEUR open at 7-month lows of 0.5869. The Euro has powered higher after parties hoping to form Germany's next government agreed to overhaul the long-standing debt brake borrowing rules in a major shift in the country's politics. The DAX soared +3.4% and the CAC gained +1.6%. The were no major economic data from the Eurozone last night. Tonight, markets look to the European Central Bank interest rate decision. The ECB is expected to lower the key rate from 2.9% to 2.65%, although disagreement among policymakers may be set to increase amid tariff uncertainty and a potential ramp-up in regional defense spending. The hotly debated 'neutral level' is also in view, with tonight's decision expected to be the last 'high confidence' cut from the ECB this year.
GBP
AUDGBP has rebounded from recent 5-year lows of 0.4876, opening today at 0.4914. The FTSE closed flat yesterday. Overnight, the Bank of England Monetary Policy Report Hearings took place. The central bank's Chief Economist Pill expressed there is more work to do to squeeze out underlying inflation. Tonight, we'll see the UK Construction PMI.
NZD
AUDNZD traded between 1.1079 highs in the late morning and 1.1045 lows just after midnight to start today flat on yesterday's open at 1.1058. The ANZ World Commodity Price Index rose 3% in Feb with almost all sectors getting a lift. Reserve Bank of New Zealand Governor Orr unexpectedly resigned yesterday with three years left in his term. He has a reputation as a maverick policymaker unafraid to surprise financial markets and clashed repeatedly with current Finance Minister Nicola Willis. Supporters praised his decisive action in easing monetary policy during Covid, as well as modernising the RBNZ's operations during his seven-year tenure. His detractors said Orr cut rates to fast, stoking inflation, then went too far the other way, causing a recession. The RBNZ Chair noted Orr felt he had achieved his objectives over the past seven years. No Kiwi economic data for the remainder of the week.