Currency Update - Tuesday 8th October 2019
AUD
A slow start to the week yesterday with most of the country enjoying a long weekend and little on the economic data calendar for markets to digest. US/China trade negotiations headlines were the life of the party; the Chinese Commerce Ministry stated that they were prepared to sign a trade deal on the agreed issues to date and come back next year to sort out the more difficult ones. The White House confirmed that China’s Liu would be in Washington later in the week for trade talks with a statement suggesting IP, enforcement and subsidies were up for discussion, contradicting an article earlier in the day that said China would not move on these issues. Currencies reacting little to the headlines, general USD strength the overarching theme. Today the local data begins with NAB Business Confidence numbers, and China returns from its Golden Week celebrations with Caixin Services PMI.
USD
AUD was softer overnight due to general USD strength, US yields were higher with the 2yr measure gaining 6bps, the AUD falling to 0.6732 this morning. In geopolitical news, the US announced they would not support or stand in the way of an imminent Turkish military operation into Northern Syria though influential Senators indicated sanctions would be imposed and Turkey could be removed from NATO if they invaded. Trump also tweeted that the US would “totally obliterate and destroy” the Turkish economy if they misbehaved, however Turkey has already resumed bombing operations. There are PPI numbers due from US tonight and Fed Chair Powell is also due to speak.
EUR
With less than 10 days to go before a Brexit deal is required, there was surprisingly little on the subject overnight, the AUD trickling slightly lower to 0.6133 this morning. Data from The Zone remains sparse tonight as well, before the Eurogroup Meetings which are due to start tomorrow night.
GBP
AUD opens this morning at a familiar 0.5475, the GBP shrugging off weak house price and preliminary retail sales numbers overnight. The highlight of UK economic data for the week will be Thursday evening’s GDP and Manufacturing Production numbers ahead of a speech by BoE Governor Carney. Markets are also eagerly awaiting Brexit developments which are certain to ramp up as the 17th Oct deadline for an agreement fast approaches.
NZD
AUD just holds on to the 1.07 handle this morning after a lackluster few days of trade against the NZD which has featured little in the way of data surprises. This theme is likely to continue with no data of note due for release this week from across the ditch, any movement to be dictated by Chinese and US data.