Currency Update - Thursday 14th November 2019
AUD
The mood in the markets today is one of disappointment in the wake of the update from President Trump. Traders were hoping for clarity in relation to trade, and many were expecting the US leader would defer making a decision on EU auto tariffs. Markets were underwhelmed when President Trump failed to map out what his trade strategy might look like in 2020 and instead spent most of his time bragging over his administration’s own achievements, which didn’t encourage traders to get off the fence. The update from Trump wasn’t downbeat, but it didn’t boost sentiment, which is why risk assets like the Australian Dollar are taking a hit this morning.
USD
The Australian Dollar has continued the recent bearish trend with Trump’s underwhelming address pushing us to lows of 0.6822. We’ve since come up and are trading marginally higher at 0.6835 but risk off sentiment has overtaken the markets as optimism over US trade policy wanes. Also sucking the optimism out from markets came from trade reports that there was a “Snag Over Farm Purchases” between China and the US. Risk assets like the Australian Dollar took the brunt of the hit though we’ve managed to hold on to the lower end of our daily trading range. On the data front US inflation data came in slightly upbeat with CPI m/m printing ahead of expectations at 0.4% (0.3% forecast) while Core CPI m/m came in as expected. Chairman Powell made some remarks to the Joint Economic Committee that interest rates are unlikely to change as long as economic growth continues through this prompted a little reaction from markets.
EUR
The hit on risk assets has resulted in a more sideways movement for the Australian Dollar against the Euro with markets currently trading at 0.6211. European equities opened in the red after a poor day for the majority of Asian markets. Traders had an optimistic outlook that Trump would provide some framework for future US-Euro trading policy but instead we're treated to bombastic self-congratulation. With a disappointing result, the trader exited European equities and gave the Australian dollar a boost up from the lows of the overnight session. Little other data or news to report so expect a quiet day of trading before German Preliminary GDP q/q comes out this evening at 6pm.
GBP
Pound Sterling has remained quiet in the midst of the US trade policy theatre with the Australian Dollar continuing a sideways trend this morning with markets currently trading at 0.5320. UK inflation in October came in at -0.2% for the month, lower than the forecast of -0.1%. Lower food and energy prices meant the annual rate of inflation fell to 1.5% which is the lowest level since late 2016. In the absence of any other major news today expect more sideways movement leading up to this evening’s Retail Sales figure out at 8:30pm.
NZD
The Kiwi’s have given the Australian Dollar a big knock following a stunning move by the RBNZ to leave interest rates on hold despite almost unanimous expectation of another rate cut. Ahead of the decision, the market was pricing in a 76% chance of a rate cut following the low reading of yesterday’s RBNZ’s survey of business inflation expectations. With Orr making the big move to leave rates on hold Aussie has fallen with markets trading at 1.06670.