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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
AUD
AUD/USD has moved up from earlier lows to be back close too unchanged on the day at 0.7100. AUD/JPY shifts are a key driver at the moment, although as we note below A$ underperformance against other commodity FX has been a theme post the RBA this week.
- AUD/USD's bounce from 0.7085, coincided with AUD/JPY rebounding off the 95.00 level. We are now back to 95.20 on this cross. The USD/JPY dip below 134.00 was supported.
- US equity futures are close to flat and while the mood for Asia Pac remains weak, China/HK markets are off early lows.
- AUD/NZD is not far from its recent lows though. The pair is trying to break back sub 1.1100. Back end yield spreads continue to move against AUD relative to NZD, but we have seen stability at the 2yr tenor, see the chart below. The AUD/NZD cross is now down 0.55% from its post RBA peak (around 1.1160).
Fig 1: AUD/NZD & Relative Yield Spreads
Source: MNI - Market News/Bloomberg
- AUD/CAD is down by more from its post RBA peak. Higher risk aversion is one factor, while AU-CA yield differentials have actually recovered in AUD's favor in recent sessions.
- Still, relative commodity trends are biasing this cross lower. The second chart below overlays the AUD/CAD cross against the ratio of base metal prices to energy commodity prices.
- Bleak global growth updates presented by both the OECD and World Bank this week hasn't helped at the margin in terms of the commodity demand outlook, while iron ore is back sub $139/tonne from recent highs of $146/tonne.
- This weekend's lockdown of 7 districts in Shanghai a likely factor in tempering recent optimism in the iron ore space.
- Note AUD/CAD is quite close to the 0.9000 level (last 0.9020). The pair has troughed ahead of 0.8900 in the past 6 months.
Fig 2: AUD/CAD & Relative Commodity Prices
Source: MNI - Market News/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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