USD Off Smalls, A$ Underperforms

The USD is lower on the day, but moves have been well contained, in what has been a quiet start to the week. AUD underperformance has been evident, but is not dramatic.

• AUD weakness has reflected commodity falls, with focus on the sharp drop in iron ore today. Active Singapore futures are down 4.5% to sub $110/tonne. The metal has lost over 11% from recent highs. The dip in AUD/USD sub 0.6900 was short lived though.
• China headlines around another property default and rising covid case numbers from the weekend have not helped broader recessionary fears in terms of the global outlook. However, other China assets have shrugged off this, with equities rebounding from earlier weakness today, while USD/CNH is back to the low 6.6900 region.
• AUD/NZD is lower, back to a 1.0970/75. This comes despite better than expected Australian domestic data, although the weaker commodity picture outlined above is weighing. AU-NZ spreads have generally move in favor of the AUD today. NZD/USD is holding above just 0.6200 for now, versus an earlier high of 0.6217.
• Elsewhere, USD/JPY continues to be supported sub 135.00. We got just below 134.80, as US equity futures fell, but now sit back close to 135.150. US futures are off worse levels.
• EUR/USD is up smalls on the day, but within recent ranges, last at 1.0425. NOK has been an outperformer, up over 0.4% against the USD. USD/NOK sits with a 9.95 handle, but we did get close to 9.9000 in earlier trade.
• In terms of upcoming event risks, note US markets are closed for the US Independence Day holiday, so no US Cash Tsys trading. In the EU, German trade data is on tap, Switzerland CPI, and EU Sentix Investor Confidence are also due, along with the EU PPI. ECB members Nagel and Guidos also speak.