Currency Update - Monday 18th November 2019
AUD
Risk has reentered the market despite the continued delays from China and the US regarding an agreed phase one of a trade deal. Ahead of the NY open and US Commerce, Secretary Ross said that a trade deal with China will be done “in all likelihood” and that talks would take place later in the day. This helped risk move higher benefitting Australian Dollar which firmed across the board, moving itself up from November lows experienced on Friday. A quiet day on the data front without any significant data for any currency pair so expect a subdued day of trade.
USD
The Australian Dollar has renewed life this morning coming up from monthly lows of 0.6770 to back above 0.68. This is in part because of heavy overselling of the AUD on Friday and due to rising risk sentiment softening the USD. On the data front US Retail Sales for October rose 0.3% month on end to beat expectations of 0.2% though core measures came in weaker than expected. Also released were November Empire Manufacturing which fell to 2.9, down from 4.0 and well below expectations of 6.0. Released a little later, October Industrial fell by 0.8% MoM, double expectations of a 0.4% decline while Capacity Utilization was 76,7% down from 77.5% and well below expectations of 77%. In the wake of the sustained optimism that a trade deal with China will be done in the weak data the USD softened and remains soft at the time of writing. The Australian Dollar is approaching some weak resistance at 0.6820 but otherwise should have a relatively clear run up to 0.6860 if USD weakness continues.
EUR
As risk reenters the market the Australian Dollar has just edged out the Euro, climbing slightly higher as markets currently trade at 0.6167. Giving the AUD a boost was the Eu trade surplus for September which came in at 18.3 to be a little worse than expected. September CPI was +0.1% MoM, weaker than expectations of +0.2% though matched expectations of 0.7% in YoY terms. The core measures also matched expectations of 1.1% in YoY terms. The reaction to the data was largely subdued with the Australian Dollar still trading in a fairly tight range against the Euro.
GBP
The bids are in for the Australian Dollar and offer for Pound Sterling as we add to a recent stretch of small incremental gains that have picked up recently as markets open this morning at 0.5276. In the UK some sectors are under pressure with shares in British telecoms and utilities under selling pressure over concern about UK Labour’s nationalisation plan. While Labour does trail in the polls investors remain concerned over a potential Labour government and what markets perceive as more radical policies. Little other data out today.
NZD
The Australian Dollar is stuck in an extremely tight range against the NZD since Friday with markets currently trading at 1.0641. Trade optimism underpins both currencies so as risk has risen we have largely tracked each other on the move up resulting in no material change. No data today to break the deadlock.