Australia, New Zealand dollars fall with global stocks after US strikes Iran
SYDNEY: The Australian and New Zealand dollars fell with global stocks on Monday after the US bombed nuclear facilities in Iran, although they found some chart support to lean on and bounced off earlier lows.
Investors were anxiously waiting to see if Iran would retaliate with the closure of the Strait of Hormuz through which around 20% of the world's daily oil and gas demand flows, with resulting risks to global activity and inflation.
The weekend US strike did send the Aussie to a three-week low of $0.6416 early on Monday, but it soon found support at the 200-day moving average of $0.6423.
It was last off 0.3% at $0.6430.
The kiwi similarly touched a three-week trough of $0.5929, before paring some of the losses to be down 0.3% at $0.5947. It has support at $0.5926.
The commodity-sensitive currencies often track global risk sentiment and tend to take a hit when equity markets slide.
Joseph Capurso, head of international economics at the Commonwealth Bank of Australia, expects the Aussie could test $0.6307 and possibly $0.6157 this week, depending on whether the Middle East conflict escalates.
'We expect these moves will start small in the Asia session and expand in the London session, unless there is soothing news from Iran or the US,' said Capurso.
'We expect intraday trading ranges to be wide this week.'
Down Under, Australia will publish the monthly inflation reading for May on Wednesday. Expectations are centred on an annual rise of 2.3%, slowing from a gain of 2.4% in April.
That is the last major data point before the Reserve Bank of Australia's policy decision on July 8.
A strong result could upset market betting for a cut next month, which is currently priced at 78%. New Zealand will publish trade data on Wednesday.
Its economy grew faster than expected in the first quarter, supporting the case that the central bank is nearing the end of the easing cycle.
Markets see scant chance of the Reserve Bank of New Zealand cutting its 3.25% rate in July, though the probability of an August move is above 60%.
'A solid cyclical upswing appears to be underway in New Zealand, supported by sharply lower interest rates and a strong rise in dairy exports,' said Paul Bloxham, chief economist, Australia, NZ & Global Commodities at HSBC.
'Australia's growth remains hamstrung by a constrained supply-side and weak productivity. Trans-Tasman divergence continues.'
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Business Recorder
9 hours ago
- Business Recorder
Australia, New Zealand dollars fall with global stocks after US strikes Iran
SYDNEY: The Australian and New Zealand dollars fell with global stocks on Monday after the US bombed nuclear facilities in Iran, although they found some chart support to lean on and bounced off earlier lows. Investors were anxiously waiting to see if Iran would retaliate with the closure of the Strait of Hormuz through which around 20% of the world's daily oil and gas demand flows, with resulting risks to global activity and inflation. The weekend US strike did send the Aussie to a three-week low of $0.6416 early on Monday, but it soon found support at the 200-day moving average of $0.6423. It was last off 0.3% at $0.6430. The kiwi similarly touched a three-week trough of $0.5929, before paring some of the losses to be down 0.3% at $0.5947. It has support at $0.5926. The commodity-sensitive currencies often track global risk sentiment and tend to take a hit when equity markets slide. Joseph Capurso, head of international economics at the Commonwealth Bank of Australia, expects the Aussie could test $0.6307 and possibly $0.6157 this week, depending on whether the Middle East conflict escalates. 'We expect these moves will start small in the Asia session and expand in the London session, unless there is soothing news from Iran or the US,' said Capurso. 'We expect intraday trading ranges to be wide this week.' Down Under, Australia will publish the monthly inflation reading for May on Wednesday. Expectations are centred on an annual rise of 2.3%, slowing from a gain of 2.4% in April. That is the last major data point before the Reserve Bank of Australia's policy decision on July 8. A strong result could upset market betting for a cut next month, which is currently priced at 78%. New Zealand will publish trade data on Wednesday. Its economy grew faster than expected in the first quarter, supporting the case that the central bank is nearing the end of the easing cycle. Markets see scant chance of the Reserve Bank of New Zealand cutting its 3.25% rate in July, though the probability of an August move is above 60%. 'A solid cyclical upswing appears to be underway in New Zealand, supported by sharply lower interest rates and a strong rise in dairy exports,' said Paul Bloxham, chief economist, Australia, NZ & Global Commodities at HSBC. 'Australia's growth remains hamstrung by a constrained supply-side and weak productivity. Trans-Tasman divergence continues.'
Business Recorder
9 hours ago
- Business Recorder
Banks, miners drag Aussie stocks lower; Mideast tensions loom
Australian shares slipped on Monday, pressured by banks and miners, as cautious investors braced for possible Iranian retaliation against the US attacks on nuclear sites, fuelling concerns over global growth and inflation. The S&P/ASX 200 index fell 0.7% to 8,446.0 points by 0057 GMT. The benchmark had ended 0.2% lower on Friday. Iran vowed to defend itself after the US dropped 30,000-pound bunker-buster bombs onto the mountain above Iran's Fordow nuclear site, while its parliament approved a move to close the Strait of Hormuz, which handles nearly a quarter of global oil shipments. 'The first moves will be reactive, possibly knee-jerk and out of fear: a typical 'shoot first and ask questions later' approach,' Kyle Rodda, a senior financial market analyst with said. He wondered if Iran would retaliate by choking off oil tankers in the Strait of Hormuz. Meanwhile, Australia's Foreign Minister Penny Wong said Canberra supported the US strike on Iran and called for de-escalation and a return to diplomacy. Energy stocks gained 0.5%, tracking oil prices, which jumped to a five-month high as Washington's weekend move to join Israel in attacking Iran stoked supply worries. Woodside and its smaller peer Santos rose 0.6% and 1.3%, respectively. Banks dropped 0.6% to drag the benchmark lower. Australian shares rise on the back of banks, energy stocks The 'Big Four' banks slipped between 0.7% and 1.6%. Miners fell 0.9% on weaker iron ore prices as demand continued to battle a persistent slump in China's property market. BHP and Rio Tinto lost 1.2% and 0.1%, respectively. In company news, Metcash rose as much as 5.4% to its highest in more than a year after the wholesale distributor's full-year net profit attributable jumped 10%. The stock was the top gainer on ASX 200. Markets now await local consumer price index data later this week for further cues into the Reserve Bank of Australia's interest rate trajectory. New Zealand's benchmark S&P/NZX 50 index slipped 0.2% to 12,544.73 points.
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11 hours ago
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Shares slip, oil rises as investors weigh Iran scenarios
SYDNEY: Shares slipped in Asia on Monday and oil prices briefly hit five-month highs as investors anxiously waited to see if Iran would retaliate against U.S. attacks on its nuclear sites, with resulting risks to global activity and inflation. Early moves were contained, with the dollar getting only a minor safe-haven bid and no sign of panic selling across markets. Oil prices were up around 2.8%, but off their initial peaks. Optimists were hoping Iran might back down now its nuclear ambitions had been curtailed, or even that regime change might bring a less hostile government to power there. Stocks slide, oil and gold jump after Israel strikes Iran Analysts at JPMorgan, however, cautioned that past episodes of regime change in the region typically resulted in oil prices spiking by as much as 76% and averaging a 30% rise over time. Key will be access through the Strait of Hormuz, which is only about 33 km (21 miles) wide at its narrowest point and sees around a quarter of global oil trade and 20% of liquefied natural gas supplies. 'Selective disruptions that scare off oil tankers make more sense than closing the Strait of Hormuz given Iran's oil exports would be shut down too,' said Vivek Dhar, a commodities analyst at Commonwealth Bank of Australia. 'In a scenario where Iran selectively disrupts shipping through the Strait of Hormuz, we see Brent oil reaching at least $100/bbl.' For now, Brent was up a relatively restrained 2.7% at $79.12 a barrel, while U.S. crude rose 2.8% to $75.98. Elsewhere in commodity markets, gold edged down 0.1% to $3,363 an ounce. Share markets were proving resilient so far, with S&P 500 futures off a moderate 0.5% and Nasdaq futures down 0.6%. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5, and Japan's Nikkei eased 0.9%. EUROSTOXX 50 futures lost 0.7%, while FTSE futures fell 0.5% and DAX futures slipped 0.7%. Europe and Japan are heavily reliant on imported oil and LNG, whereas the United States is a net exporter. Questioning Powell The dollar edged up 0.3% on the Japanese yen to 146.48 yen , while the euro dipped 0.3% to $1.1481 . The dollar index firmed 0.17% to 99.078 . There was also no sign of a rush to the traditional safety of Treasuries, with 10-year yields rising 2 basis points to 4.397%. Futures for Federal Reserve interest rates were a tick lower, likely reflecting concerns a sustained rise in oil prices would add to inflationary pressures at a time when tariffs were just being felt in U.S. prices. Markets are still pricing only a slim chance the Fed will cut at its next meeting on July 30, even after Fed Governor Christopher Waller broke ranks and argued for a July easing. Most other Fed members, including Chair Jerome Powell, have been more cautious on policy leading markets to wager a cut is far more likely in September. At least 15 Fed officials are speaking this week, and Powell faces two days of questions from lawmakers, which is certain to cover the potential impact of President Donald Trump's tariffs and the attack on Iran.
