Risk Off Tone Weighing On A$ As Geopolitical Tensions Elevated

Aussie is trending lower initially driven by a general risk off tone with Israel saying that it will respond to Iran’s attack and then it took a further step down following the yuan fixing above 7.1000. There was a small bounce after the stronger-than-expected Q1 China GDP but that was short lived as equities across the region sell off. AUDUSD is down 0.4% to 0.6414, well below the bear trigger at 0.6443. The USD index is up 0.2%.

• AUDUSD approached 64c making a low of 0.6408, below support at 0.6412, a Fibonacci retracement. The pair is now hovering just above this support level. A clear break opens up 0.6339, November 10 low.
• Aussie is holding steady against the kiwi at 1.0913, off the intraday low of 1.0892. NZD is also affected by the risk pullback. But AUDJPY is down 0.4% to 98.99, AUDEUR -0.3% to 0.6047 and AUDGBP -0.2% to 0.5164.
• Equities are selling off sharply with the ASX down 1.8%, Hang Seng -1.6% and CSI 300 -0.9%. The S&P e-mini is 0.2% lower. Oil prices are rising with WTI up 0.8% to $86.13/bbl. Copper is down 0.8% and iron ore has fallen below $110/t.
• Later the Fed’s Powell (1815 BST), Jefferson, Williams, Barkin and Collins appear, as well as BoE’s Bailey and BoC’s Macklem. There are also US March housing starts/permits, IP & April NY Fed services, UK labour market and Canadian March CPI data. The IMF is due to publish the April World Economic Outlook.