Currency Update - Thursday 24th October 2019
AUD
A quiet morning today in the absence of significant news or data has held the Australian Dollar in a holding pattern. Other risk assets such as US equities traded equally flat, however traders remain cautiously optimistic about the US-China trade situation. A senior member of the Chinese government said that cooperation between the two sides is mutually beneficial, which is a fine example of stating the obvious, but at least the language is positive. Expect sentiment to remain cautiously positive for the Australian Dollar as long as the language from both sides is conciliatory.
USD
The Australian Dollar has pushed slightly higher overnight against the USD, coming off an overnight low of 0.6834 to recover to the 0.6855 region where we we trading yesterday. Little significant movement for the Australian Dollar which is to come as expected in the absence of news or data. Australian Dollar strength is for now being sustained by the remaining optimism in the markets. Some relatively minor USD data is set for release tomorrow morning with Flash Manufacturing PMI out at 12:45am.
EUR
The Australian Dollar remains range bound against the Euro, logging another day of flat trading. We open at 0.6155 and remain stuck in a sub-25 pip trading range for past few days. Significant European PMI data is coming out tonight however that could help dislodge the Australian Dollar. With that said, European PMIs are currently positioned for only limited improvement, consistent with the near 0% growth in Europe and recession in Germany. If PMIs provide little impact on currency markets expect the Australian Dollar to finish out the week within a tight range against the Euro. Mario Darghi will also hold his final ECB Press Conference as ECB President tonight, perhaps an opportunity for him to shout his opinions from the rooftops without fear of reprisal.
GBP
The Australian Dollar continues to edge lower against Pound Sterling, grimly hanging on to 0.53 as the likelihood of a no-deal Brexit lessens by each passing day. Boris may have finally surpassed Theresa May in getting the initial stages of a deal passed before Parliament, however he has seemingly missed the deadline he set for himself when he took up the mantle of PM. With the deal unable to be accepted before the 31st of October, the extension begrudgingly requested of the EU by Boris will now likely push back the Brexit date. How long will be Brexit pushed back remains to be seen but anywhere from a few weeks to a few months seem likely. In the meantime traders are pleased to see both the deal and the extension as this lessens the chance of a no-deal Brexit and therefore boosts Pound Sterling.
NZD
The Australian Dollar continues a slow slide against the NZD sending us to current lows of 1.0670. While Australia’s broad commodity export basket has recovered some of its steep decline in July-August, iron ore has lost momentum this month, opening the door for further losses. No data out this week that should any material impact on AUD/NZD rates.