Aussie is the king again when it comes to the fx market with risks assets dominating all across the board, including oil and US equities being at the highest level this year.
AUD is by far the strongest currency in G10 today, gaining as much as 1,3% against USD and SEK and 1,25% against the EUR, those 3 being the weakest in the club today. The USD still feels the heat of Friday’s weak NFP while European negative rates currencies suffer amid a strong risk-on mood. AUD typically enjoys such circumstances and today things are even brighter for the currency following a decision of the RBA not only NOT to cut interest rates but also a remark in the statement signalling that rates were fine for now. With the RBA behind the focus turns to RBNZ which is going to decide on rates tomorrow and the market is split. This has been hardly a burden for the NZD today - it was the 2ns strongest currency in G10.
The risk on has been fueled by oil that looks bound to close above 50$/b for WTI for the first time this year. Worries on output disruptions in Nigeria and expectations of more inventory declines keep driving oil higher even as the number of rigs increased last week, possibly signalling that prices came back too high too soon.
A weaker dollar also seems to be favored by equities. Not only it translates into higher profits but also (and this is especially important in our view) diminishes a pressure on the yuan, possibly delaying another wave of turbulence from China (which in our view is inevitable). So US equities were willing to disregard weak domestic data "in exchange" for these benefits. While indices are stretched there has been no sell signal yet.
The Asian session on Wednesday looks relatively calms with manufacturing data from New Zealand and the final GDP reading in Japan as the top 2 figures in the calendar.
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