Once more, the high of the US equity market on Wednesday coincided almost exactly (in fact within 10 minutes) of the high of the AUD/USD exchange rate. The Aussie Dollar rose steadily through the European morning to reach a best level at 12.20pm of 0.7910; the first time it had been back on a 79 cents ‘big figure’ since February 20th. From its level at that point of 25,110, the Dow Jones Industrial Average then fell almost 430 points over the next 4 hours, dragging AUD/USD down to a low of 0.7870. Overall, however, the Aussie has been pretty resilient. The US stock market is this morning almost exactly where it was immediately prior to Friday’s US labour market numbers but AUD/USD is still three-quarters of a cent higher.
In a very tough statement issued today, the Australian prime minister Malcolm Turnbull and the foreign minister Julie Bishop said British prime minister Theresa May had “made a compelling case on the responsibility of the Russian state for this attack in an unlawful use of force by Russia against the United Kingdom and her people”. The statement said Australia was “gravely concerned that a military-grade nerve agent developed by Russia” was used in an attack on British soil, and “we share the UK’s outrage over this targeted attempt to commit murder using chemical weapons”. Turnbull and Bishop said Australia supported the May government’s efforts to investigate and bring the perpetrators to justice, and also backed the UK’s right to take “retaliatory measures, including its decision to expel 23 Russian diplomats and to call for an emergency session of the UN Security Council”. Australia is considering its options by way of response, in coordination with the UK government and other allies
In the only incoming economic data today, expected inflation rate as represented by the Melbourne Institute Survey of Consumer Inflationary Expectations, increased by 0.1 percentage points in March to 3.7% from 3.6% in February. Total pay growth over the 12 months to March 2018 increased to 2.0% from the December quarter reading of 1.5% although respondents appear cautious about future wage growth; expectations for pay growth in the next 12 months fell to 1.8% from 2.4% in the previous quarter. The Australian Dollar opens this morning in the mid-USD78’s with GBP/AUD at 1.77.