Oil rise hits markets
The Australian and NZ dollars were both weaker overnight as US sharemarkets fell, with rising oil prices spooking investors.
Brent crude hit USD98 per barrel, while WTI crude reached USD95 after the US said it had destroyed five Iranian oil tankers following attempted Iranian strikes on US forces.
The Dow Jones fell 1.2%, the S&P 500 lost 0.6%, and the Nasdaq dropped 0.3%.
In currency markets, the kiwi led losses, down 0.5%, while AUD/USD fell 0.1%.
In Asia, USD/JPY fell 0.3%, while USD/CNH and USD/SGD both lost 0.1%.
Australian consumers turn cautious as cost pressures bite
Australia’s consumer confidence weakened sharply in September, with Westpac’s Consumer Sentiment Index falling 5.2% m/m to 84.4, moving closer to deeply pessimistic levels. Households grew more concerned about potential RBA rate increases and higher fuel costs, adding fresh pressure to already stretched budgets.
The survey highlighted a renewed rise in living expenses, with the sub-index measuring assessments of family finances compared with a year ago dropping 9.2%. The result suggests many consumers are feeling less financially secure and becoming more cautious about spending.
For AUD/USD, initial support is seen at the 21-day EMA of 0.7148, followed by the 50-day EMA at 0.7094. Resistance remains at 0.7250. Meanwhile, AUD/NZD has climbed to new muti-year highs.
Stronger Japan growth keeps rate rise expectations alive
Japan’s economy expanded at an annualised 1.4% q/q in Q2, revised up from 1.1% as business investment proved more resilient than first estimated, although growth still fell short of the 1.6% forecast.
On a non-annualised basis, GDP rose 0.4%, up from the initial 0.3% and in line with expectations. Exports contributed positively to growth, while domestic demand remained soft due to flat household spending and a 0.9% decline in capital investment. Firmer economic activity and stronger real wage growth continue to support expectations for further BoJ rate increases.
USD/JPY is trading at a seven-month low, about 6.4% below its 23 July peak of 163.99. The 21-day EMA at 158.07 and the 50-day EMA at 159.24 remain key resistance levels.
Oil rise spooks markets
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 7 to 12 September
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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.
