Currency Update - Monday 11th March 2019
AUD
The close out to last week saw the AUD sold off further, with no local data of note to consider on Friday traders turned their attention to Chinese data and the figures were another disappointment. Exports fell by more than 20% vs the expectation of a 4.8% drop and imports also suffered, dropping by 5.2% vs 1.4% expectation with the trade surplus printing at $4.12b against the expectation of $26.20b. All in all a massive miss for Australia’s largest trade partner and a clear indication that the trade wars are having a very negative affect. CPI printed for China over the weekend and hit the forecast but the weaker PPI just added fuel to the fire with a miss of 0.1%. AUD/USD tested the lows at 0.7003 before popping back up on a shock miss for the US Non-Farms, the NFP added a mere 20k in new jobs for a massive miss and allowed the Aussie a battlers chance. AUD/USD made gains in the wake of the print and we open this morning at 0.7038, the Aussie holding that 0.70 handle for the time being but ongoing risk events are likely to continue to weigh on our local unit; Brexit, trade wars and the global slow down to name a few. A busy week on the Chinese data calendar may provide volatility, the NAB business confidence tomorrow is the first local piece of note. 0.70 remains the key support levels and 0.7050 then 0.71 forms resistance.
USD
The Non-Farm Payrolls were the key piece of data to close out the week’s trade for the United Sates and the number was a mile off the forecast! With the forecast at 180k and the recent labour market data all upbeat the actual addition of a miserly 20k in new jobs was a shocker for all. AUD/USD managed to catch a bid in the aftermath but gains were tempered as the U.S Unemployment Rate fell from 4% to 3.8%, beating the expectation of 3.9%. Average Earnings also beat the forecast to remove some of the offered tone from the big dollar but the pressure was on and the Greenback was sold off versus most counterparts. The President was on the wires talking up his negotiations with China, along with a bit of verbal intervention for the slumping US Bourses; Trump announcing he was confident of getting a deal with China and once done there would be a “very big spike” in US markets. Wall Street having a weak day but pairing most of the losses into the close. FED Governor Powell is to be interviewed this morning and we have Retail Sales to print this evening, the DXY is weaker by 0.24% at 97.36 to kick off the week.
EUR
With better economic data released from Europe over the weekend and a weaker USD, the AUD held its ground to open at 0.6264 this morning. French Industrial Production rose to 1.3% (0.1% exp), French Trade Balance was also better, Italian Industrial Prduction rose to 1.7% (0.2% exp). German Factory Orders however were weaker at -2.6% (0.5% exp). European equities closed in the red, with losses of around 1%. The Euro avoided total capitulation last week, holding onto the 1.12 mark against the big dollar. German Industrial Production numbers will be closely watched this evening, otherwise it's a relatively quiet week for the Euro, Thursday's German & French CPI & EU CPI Friday being the pick of the bunch.
GBP
The Pound was weaker against the USD, opening below 1.30 this morning as Brexit uncertainty continues. Mixed reports of progress over the weekend initially saw the Pound rally, only for rhumours of EU concessions to be squashed. AUD opens above 0.54 after falling to 0.5320 lows last week. With important votes to be held in Parliament this week, most commentators believe the likely outcome is a delay to Brexit. GBP movement will be headline driven for the most part. GDP and Manufacturing Production data released on Tuesday will create some attention, as well as the release of the annual budget on Wednesday.
NZD
AUD lost ground to it's Antipodean cousin towards the end of last week. Today's opening low of 1.0348 the lowest level since June 2017. 1.0230 is the next key level of support if 1.0350 breaks. The slowing Aussie economy could well drag the AUD/NZD pair further south, especially if ithe RBA cut interest rates later in the year. The Kiwi data calendar is bare this week. NZD to react to movements in the big dollar and risk sentiment.
Today’s data
USD:
Retail Sales
EUR:
German Industrail Production, Trade Balance