Currency Update Wednesday 13th March 2019
AUD
The AUD faired pretty well in the last 24 hours despite some increased risk bought to markets from the rejection of the latest Brexit deal. Locally the NAB business confidence survey printed at 2, declining from the previous 4 but markets were expecting a downturn and the AUD shrugged the data off. Home Loans printed at the same time and were better than the -2% forecast but still negative at -1.2%. AUD though, well supported for the time being, pushing up to 0.7092 in the overnight session on a weaker USD before trimming some of those gains on the open this morning. 0.71 is the key resistance to crack but then clears a path to 0.7150, support remains intact at 0.7050.
USD
US Markets continued to add gains for a consecutive day’s trade, something of a rarity of late and the DOW did not join the party; the S&P added 0.2% and the Nasdaq 0.4%, the DOW though failing and falling by 0.4%. US CPI was negative missing the mark by 0.1% to print at 1.5% and gave the big dollar somewhat of an offered tone in the aftermath. AUD/USD hitting the high of 0.7092. Trade talks with China continue and the no news is good news feeling is getting tested, US negotiator Lighthizer stressing overnight that although there is progression tariffs need to remain on the table to enforce any deal. The USD is 0.21% weaker in DXY terms this morning ahead of further key data this evening; Durable Goods Orders the key print, with MBA Mortgage Applications and Construction Spending released around the same time.
EUR
European equities were firmer at the open but closed with a mixed bag, ongoing Brexit shenanigans are causing volatility across the Zone as the uncertainty continues. The ECB’s Praet was talking up the use of negative rates as a tool for the central bank to control inflation, setting the tone for a prolonged period of loose monetary policy. Data wise a quiet night for the Zone, Brexit headlines did and will continue to dictate.
GBP
Another Brexit failure for the UK’s Theresa May, just when it looked like she had a deal the Parliament have voted it down, the nightmare continues for the embattled PM and the UK Pound reflected the disappointment. After a strong rally to kick off the week the GBP fell sharply overnight across the board, the AUD gained 1.6% but the big moves were in cable, the USD adding over 2% to drag GBP/USD down to 1.3005. With the first vote lost, attention now moves to the upcoming votes for the remainder of this week; tomorrow the vote is on whether to rule out a ‘no deal Brexit’ completely, if a ‘no deal’ is voted down then Thursday's vote is whether to seek an extension to Article 50 and therefore to Brexit. Has this not gone on long enough! Any extension must be agreed by the EU and they will be looking for a reason to grant one, the UK will need to have some kind of plan as to why an extension will achieve anything new.
NZD
The Kiwi took some gains on the weakened USD overnight, managing highs of 0.6871, the USD weaker by 0.21% on the DXY index. With no data of note from across the Tasman the NZD has been pushed along by offshore events and has mirrored the AUD. We have the REINZ House Sales data to digest today but little movement is expected as a result, the previous months data was the weakest seen in three years. Hopefully the Kiwi market can show some sign of recovery.
Today’s data
AUD:
Westpac Consumer Confidence
USD:
Durable Goods Orders, MBA Mortgage Applications
EUR:
EZ Industrial Production
GBP:
Brexit, Brexit, Brexit zzzzzzzzzzzzzz
NZD:
REINZ House Sales