Currency Update - Friday 15th March 2019
AUD
AUD/USD failed to breach the 0.71 handle and has now capitulated and given back the earlier gains, a stronger night for the USD overnight although the moves were somewhat muted. Risk appetite reversed as the meeting between trump and Xi was delayed until April, AUD falling to below the 0.7050 support in the aftermath but managing to reclaim the handle a little later, bouncing off lows of 0.7041. Consumer Inflation Expectation for Australia increased to 4.1% from the prior 3.7% but did little to the AUD, China data was mixed; a flat Retail Sales number (8.2%), declining Industrial Production (5.3% vs 5.6% forecast and 6.2% prior) but Fixed Assets did improve from 5.9% to 6.1%, matching the forecast. Brexit remains a key driver, the ball is now back in the EU court after a vote to request an extension of article 50 was passed overnight. All 27 EU countries need to unanimously agree to the request so a ‘hard Brexit’ is not off the table yet, despite the UK Parliament vote. No local prints to close out the week so offshore events, Brexit and risk sentiment will drive to the close.
USD
The big dollar managed some minor gains across the board overnight, risk appetite suffered as the scheduled meeting between the US and Chinese leaders was delayed until April. US markets taking a hit but the US Dollar gaining on safe haven plays, the DOW, S&P and Nasdaq all finishing 0.1% either side of flat at the close, in DXY terms the USD is 0.3% stronger. Both Initial and Continuing Jobless Claims increased slightly to miss their forecast, Import/Export data though was better than forecast, in stark contrast to the latest Chinese numbers which will please the President. The Donald will need some cheering up today after the Senate passed a resolution to overturn the national emergency declaration. 12 Republicans joined the Democrats to make the vote 59-41 against the President’s decision. This is an embarrassing result for the Donald although the President does have the power to veto and has Tweeted that he intends to do so. The vote does show support for the President is under question and comes just after a second defeat for Trump. The Senate voted against the President to end support for the military backing of the Saudis in Yemen earlier this week. Durable Goods Orders the key print to end the week.
EUR
AUD/EUR traded sideways the past 24 hours, with no domestic data stimulus, the focus was on German and French CPI. Monthly German CPI fell by 0.1% (0.4% v's 0.5% exp), French CPI printed as expected at 0.0%. Markets ignored the data for the most part, Eurodollar opens marginally softer around the 1.13 mark, again trapped in a tight range. EU CPI released this evening could cause more volatility in Euro pairs, considering this figure is central to the ECB's mandate. Headline inflation is expected a 1.5%, Core CPI at 1%.
GBP
The U.K Parliament voted to extend Article 50 overnight, markets now wait for the EU's response. The Pound continues to be extremely volatile against the USD, up to 1.33, but settling closer to 1.32. The AUD remains subdued, at the botom of its recent range at 0.5335 this morning. The EU is expected to take a dim view on the request to extend until the government offeres a plausible reason to do so. An election or new referendum cannot be discarded, we'll have more info over the coming week. Movements in the Pound will be headline driven over the weekend. U.K Consumer Inflation Expectations are released early morning.
NZD
The Kiwi found support at 0.68 U.S cents yesterday, rallying 30 pips overnight to open at 0.6830. This morning's local Business Manfucaturing Index printed better than expected, Tourist numbers fell. The Kiwi is well supported as USD appeal has sunk the past week. Its a quiet weekend for global data, so the Kiwi is expected to trade within its recent range.
Today’s data
USD:
Feb Industrial Production, Uni of Michigan Sentiment