Currency Update - Friday 1st November 2019
AUD
The Australian Dollar enjoyed a great run across the board yesterday before risk sentiment took a hit overnight following reports from the Chinese trade delegation that suggested a long-term trade deal might not be possible with the US. This could easily be political maneuvering however for now traders are content to trim their risk positions. On the data front, Chinese manufacturing data came in at 49.3, which shows that manufacturing is still in contraction, however the services measure shows growth. We also had a massive jump in Building Approvals up 7.6%, flogging the expectation of 0.1%. We’ve still got Chinese Caixin Manufacturing PMI out later this afternoon but the big data today will be out this evening with US Average Hour Earnings, Non-Farm Employment Change and the official unemployment rate. Great opportunity for market orders this evening on both the buying and selling side.
USD
The Australian Dollar took off running yesterday, punching through the oft-tested resistance of 0.69 and hitting a high of 0.6930. The run was short lived however, when Chinese-US negotiations took a turn for the worse with Beijing expressing concern whether a long-term deal under the Trump presidency is possible. The reports are coming in that the comments are motivated by internal political pressure within Beijing as some people in the Chinese government deem him to be unpredictable. Fortunately for AUD bulls, the US Dollar Index posted losses for the third straight day on Wednesday after the FOMC refrained from delivering a clear message that they will be pausing rate cuts, extended its losses towards the 97 handle. On the data front, US Personal Income for September rose 0.3% as expected though Personal Spending rose 0.2%, falling short of expectations of 0.3%. Core PCE was flat MoM in September, short of expectations of +0.1% though matched expectations of 1.7% in YoY terms. Also released and the Q3 Employment Cost Index rose 0.7% as expected while weekly jobless claims were modestly weaker than expected. This evening we’ve got one more big data US data release with US Average Hour Earnings, Non-Farm Employment Change and the official unemployment rate.
EUR
The Australian Dollar has twice tested highs of 0.62 against the Euro in the past 24 hours and twice been knocked down. A mixed print of inflation data from the Eurozone helped Aussie bids with CPI dipping to 0.7% against a forecast of 0.8%. The slide in the cost of living points to falling demand. It is worth noting the core reading ticked up to 1.1% from 1%, so underlying demand appears to be weak, but on the rise. Quarterly growth was 0.2%, which topped the 0.1% forecast. Big wins in the Building Approvals rate for the Aussie helped push the local unit higher and eased concerns of Australia’s renewed downturn in the housing markets. No other news today for the Eurozone so expect AUD/EUR to finish the week flat.
GBP
The Australian Dollar is in the red this morning, slipping to lows of 0.5317, following the latest opinion polls that have put the Conservative Party in the lead in the UK election polls. The view in the market is the Tories are more pro-business, which is why the Pound is in demand. Adding to that, traders believe a Boris Johnson led government would have a better chance of delivering Brexit seeing as his deal was supported in principal in Westminster. Little other news or data to report on for Pound Sterling as we finish up the week.
NZD
The Australian Dollar has extended its losses through to a low of 1.0737 before finding some support. Losses came chiefly from the ANZ New Zealand Business Outlook that while had mixed findings, still provided a jump of 12 points. More broadly, business confidence is still extremely low, however some positive turn was enough for traders to get their bids in on the NZD to close out the week.