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[MARKET ANALYSIS] AUD propped up by metals and RBA bets; JPY narrowly lags peers

The AUD is currently benefiting from rising copper and gold prices, alongside speculation of a potential rate hike by the RBA, which reflects growing inflationary concerns.

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Israeli PM's aide says "so far the operation is proceeding as planned; we are seeing the first cracks in the regime, but patience is needed"; adds that US President Trump and Israeli President Netanyahu speak daily

Republicans are preparing to confront a huge price tag for the Middle East war following closed-door briefings which detailed the fast consumption of munitions and lack of any firm deadline for the campaign, Politico reports citing sources

[MARKET ANALYSIS] AUD propped up by metals and RBA bets; JPY narrowly lags peers

Azerbaijan withdraws its diplomats from Iran, Interfax reports

[MARKET ANALYSIS] European equities coming under modest pressure, Roche hit as weight loss drug disappoints; US equity futures softer heading into NFP

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  • DXY is relatively flat with a mild upward bias after a session of gains on Thursday. Thursday's action was spurred by a haven bid, and as yields climbed on firmer oil prices,in addition to well-received data ahead of NFP. 
  • The US February jobs data is the highlight (preview available on Newsquawk), with the consensus looking for 59k from a prior 130k; the Bloomberg whisper number is 65k. US retail sales, released at the same time as the jobs data, is expected to show headline falling by -0.3 M/M in January. Today’s speakers’ slate includes: Fed’s Daly (2027 voter, dove; no text expected, but there will be a Q&A), Fed’s Paulson (voter, dovish; text and Q&A expected), Fed’s Schmid (2028 voter, hawk; no text expected, but Q&A is), Fed’s Collins (2028 voter, neutral; text expected, but no Q&A), Fed’s Hammack (voter, hawk; text and Q&A expected); Fed’s Waller (voter, dove), Fed’s Goolsbee (2027 voter, dovish) and Fed’s Miran (voter, uber dove) will give TV interviews.
  • “FX markets remain nervous, and we doubt traders are prepared to run any short dollar balances ahead of possible weekend event risk”, says ING, as markets remain focused on the growing Middle Eastern conflict. DXY currently resides in a 98.942-99.181 range at the time of writing, within Thursday’s 98.667-99.413 range.
  • EUR/USD returned below the 1.1600 handle after initially reclaiming the level in APAC trade, with downside exacerbated by the ongoing geopolitical and energy-related concerns, alongside the firming USD as traders flock to the haven. Little reaction to the rhetoric from ECB officials. Meanwhile, traders fully price in a 25bps ECB hike this year, Bloomberg reported. EUR/USD trades in a 1.1583-1.1621 range, within Thursday’s 1.1559-1.1647.
  • GBP/USD is subdued amid the recent USD strength but remains tucked within yesterday’s 1.3297-1.3387 range. News flow for the UK remains light, but recent headlines centre around UK PM Starmer's shift from initially refusing to assist US military operations against Iran to later granting access to British military bases for "limited" and "defensive" purposes.
  • USD/JPY is firmer with the JPY the underperforming G10 amid a rise in US yields and given Japan’s exposure to energy imports. The pair traded sideways for most of the APAC session, given the indecisive mood in Japan, and a quiet data calendar, with no tier-1 releases; although, it gradually edged higher as domestic sentiment stabilised.
  • Antipodeans are mixed, the AUD mildly outperforms amid gains in copper and gold prices and as recent inflationary concerns spurred some outside bets for a rate hike by the RBA this month. AUD/USD trimmed gains after hitting an intraday peak of 0.7047 (vs low 0.7015). NZD/USD hit a current low of 0.5881 (vs high 0.5916), with the 200 DMA (0.5876).
Context

In contrast, the JPY is lagging due to higher US yields and Japan's ongoing energy import issues, indicating a divergence in regional monetary expectations that may affect cross-currency dynamics. Traders should monitor these trends closely, especially as geopolitical tensions loom and the NFP data looms on the horizon.

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