Currency Update - Friday 29th October 2019
AUD
Risk currencies were supported overnight with further advancements in trade negotiations between China and the US, Trump saying that it seemed discussions on phase one of a trade deal with China were ahead of schedule and he expected to be able to sign the agreement at the approaching APEC meeting in Chile. Also giving risk a boost, the UK accepted the EU offer of a 3 month extension to the Brexit deadline. Renewed market optimism allowed AUD to either firm or hold ground against the major crosses, even without the influence of any noteworthy data pieces. RBA Gov Lowe speaks this evening and a big week of local data kicks off in earnest tomorrow with the CPI data for Q3.
USD
After a quiet Asian session yesterday the AUD was able to make minor gains overnight against USD, opening this morning at 0.6840. A reduced risk level was the main driver for the gains, with US equities also benefiting to the tune of about 0.5%. Positive low-impact US data wasn’t enough to hold the AUD back, markets happy to wait for the main course later this week; an eagerly anticipating third consecutive interest rate cut from the Fed tomorrow night (90% chance currently priced in), along with personal spending, key employment data and manufacturing data to round out the week. Support for AUD remains around 0.6820 and offering interest just ahead of the 0.69 level.
EUR
A very quiet start to the week with little-to-no data from The Zone, currencies were suitably sluggish with AUD opening at a familiar 0.6158 this morning. Confirmation that an agreement had been reached on a 3 month extension to the Brexit deadline was more-or-less expected by markets (multiple sources had already indicated this would be the case) and left markets unmoved. Movements here are likely to remain minor at least for the next 24 hours with no data due for release.
GBP
AUDGBP remains locked in a closely fought battle, unable to trade outside of a 53 pip range for the last 11 days and opening this morning at 0.5313. After the 3 month Brexit extension was confirmed overnight, Boris then lost a vote to hold an early general election in December, however it is expected he will request a second vote in coming days (remember the same tactic yielded a vote in favour of the Brexit deal at the beginning of last week). Only low-impact data due this week from the UK until Friday night’s Manufacturing PMIs.
NZD
AUD has squeezed higher against NZD in the last 24, taking advantage of the Kiwi Labor Day Holiday, opening at 1.0770 this morning. Aussie data (starting with tomorrow’s CPI) is the first chance for decent moves here, NZ ANZ Business Confidence on Thursday the only influential piece of data from across the ditch for the whole week.