Currency Update - Thursday 14th March 2019
AUD
The AUD remains buoyant and pushed up to test the 0.71 handle overnight, ultimately failing to break through but some positive moves none the less. We open this morning shy of 0.71 but at recent highs following solid gains overnight for Oil and the CRB Index, providing commodity currencies with a bid tone. Yesterday’s Westpac Consumer confidence was a shocker, printing at -4.8%, a sharp fall from the previous print of +4.3% and a stark reminder of the underlying issues within the Aussie economy. The removal of the ‘no deal’ Brexit scenario by vote overnight has given Sterling a solid bid and provided an improvement to sentiment in general but this is not over yet and there are further votes to be counted. Expect attention to be firmly on the UK and Brexit for the remainder of the week. Locally we have Consumer Inflation Expectation, a minor print ahead of data from China in the form of Industrial Production and Retail Sales, expectation is for both to have slowed (due to trade tariffs and ongoing concerns). Fixed Assets may show some glimmer of growth hopes though as the Chinese Governments special measures filter through. AUD/USD looking likely to break 0.71 unless the Chinese numbers are a way off of forecast, support remains strong at 0.7050 then of course 0.70.
USD
U.S Markets all pushed higher overnight, even the DOW managed gains as some upbeat trading sentiment returned to investors. With the ‘no deal’ Brexit now removed, markets around the world have reacted positively, despite the fact that UK parliament has taken away the final piece of leverage the PM had. Durable Goods Orders gained by 0.4%, smashing the forecast of -0.4% although the ex-Autos component was at -0.1% vs forecast of +0.1%. The big dollar showed little reaction to the data print though and no reaction again to the upbeat January Construction Spending, rising 1.3% vs 0.5% expectation. The Sino/US negotiations roll on, little has been said in relation to progress although the Donald did tweet that things were “going along nicely”, the President remains hopeful a deal can be struck. Also on Twitter and more in keeping with the Donald’s usual prose, the President accused the media of photo shopping pictures of Melania to stoke conspiracy theories, stating the media are “getting more deranged with time”. It must be contagious!! Import/Export Price Index tonight with Initial and Continuing Jobless Claims.
EUR
The focus was on Brexit overnight, where the U.K parliament voted to reject a no-deal Brexit. The vote passed narrowly, to the chargrin of Brexiteers. In Europe stocks were bid on the improving prospects of the U.K not crashing out of Europe. Surprisingly there was good news from Europe, Industrial Production beating forecasts to print at +1.4% in January (+1% exp). Eurodollar rallied over 1.13 as the USD index broke down once again. German and French CPI are released this evening, an important update to the latest installment of inflation numbers.
GBP
Brexit mesiness continued overnight, with parliament voting to reject a no-deal Brexit. It was a narrow victory however and one that leaves economists scratching their head as to the way forward. An extension to Brexit will be voted on this evening, the EU have categorically refused to negotiate any further however, leaving the U.K in a tricky position. EU Brexit negotiator Barnier said Brexit talks are 'done and dusted', the EU's Moscovici said last night's vote was the U.K's 'last chance'. Where to from here nobody knows, the Pound did enjoy the result, rallying over 1.33 against the USD and pushing the AUD back down to support at 0.5322. Chancellor Hammond released the budget for 2019, growth projections have been revised down to 1.2% from 1.6%.
NZD
AUD/NZD opens towards the lows this morning at 1.0346. The Kiwi has rallied to 0.6850 against the USD of late, a decent performance as the USD continues to trade in a big old range. With no local data to report the Kiwi remains at the mercy of broad based moves in and out of the big dollar. Risk sentiment has improved after the U.K parliament's decision to reject a hard Brexit, the Kiwi feeling the love for now.
Today’s data
USD:
Weekly Jobless Claims
CNY:
IP, Retail Sales, Fixed Asset Investment