Written by Steven Dooley, Head of Market Insights
Global overview
The US dollar’s initial Monday morning surge – driven by a flight-to-safety after renewed tensions in the Middle East – eased overnight with the greenback seeing an extension of last week’s losses. The Japanese yen was the biggest winner overnight although the AUD also gained.
Global markets on edge
Financial markets mostly rebounded overnight after an initial fear-driven sell-off driven by a sharp escalation of hostilities between Israel and Hamas over the weekend.
Early Monday trade had seen sharemarket futures lower, oil and gold higher, and safe haven currencies like the US dollar and Japanese yen supported.
However, the early reaction was mostly short lived.
Most notably, the AUD/USD rebounded in the overnight session with the pair up 0.5%.
Similarly, the NZD/USD also rebounded from lows, to gain 0.5%.
US dollar extends last week’s losses
In other markets, the US dollar was also weaker after an initial push higher.
The US dollar index finished the session down 0.2% – its fourth consecutive daily loss.
The USD/JPY was the biggest loser of the majors with the pair down 0.6%. The pair has recently been pressured after potential intervention last week at the key 150 level.
The EUR/USD and GBP/USD was both flat as European FX continued to underperform.
Small business data in focus
Tonight’s focus is on the National Federation of Independent Business small business survey.
As the restrictive posture of monetary policy weighs on lending conditions, the NFIB small business optimism index is likely to have decreased in September (Aug: 91.3) and will have remained at a historically low level.
Given that disinflation is still present, the poll is expected to indicate a reduction in inflationary and wage pressures. Since the end of 2020, the net proportion of businesses expecting the economy to improve has been negative, and this trend is anticipated to persist in the near term.
Aussie rebounds after Monday morning sell-off
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 9 – 14 October
All times AEST
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
