Currency Update - Tuesday 19th November 2019
AUD
AUD spent yesterday treading water with a baron economic calendar and persistently low volatility levels across currency markets. This morning’s RBA monetary policy meeting minutes are unlikely to change the mood, the decision to leave rates unchanged on Melbourne Cup Day was largely expected by markets. To trade wars, and headlines surfaced overnight that pessimism in China is growing of the chances of a ‘phase one’ trade deal due to US reluctance to roll back tariffs. USD gave up ground against most currencies on the headlines, the DXY slipping 0.2% although the AUD unable to capitalise due to its sensitivity to risk sentiment and a slip in commodity prices.
USD
In a quiet overnight session, there were headlines that Fed Chair Powell had met Trump and Mnuchin at the White House with Fed Chair stating that policy was set to support the dual mandate, and was based on a careful, objective and non-political analysis of incoming data. Trump called the meeting “very good and cordial” and said that negative interest rates and the USD were discussed at the meeting. With only Building Permits out tonight, current levels are likely to remain, support for AUD at last week’s low around 0.6770 and resistance ahead of 0.69.
EUR
AUD opens near two-week lows against EUR at 0.6149 this morning, deterioration in US/China trade talks undermining the local unit. With no data releases to get markets moving, there is little to report here, Friday night’s PMIs (which area big driver of EURUSD) will be the highlight of the week.
GBP
AUD continues to grind lower against GBP, opening at 0.5255 this morning which is only 20 pips shy of 3 year lows. GBP strength can be attributed to Brexit optimism; Opinion polls continue to point to a Tory victory with Raab saying he believes it isn’t remotely likely that Britain will leave the EU without a deal. Boris Johnson also told reporters on the weekend that all Conservative Party candidates had agreed to back his Brexit deal. With less than a month until the UK election, a Boris-lead majority delivering a Brexit deal in January is looking more and more likely. Further GBP strength is not unlikely.
NZD
A quiet day in markets yesterday saw AUDNZD trade almost in lockstep. This morning’s PPI report from across the ditch beat expectations but left currencies unmoved. Tomorrow Milk Price Auction which will be the last piece of economic news from NZ for the week but is unlikely to change the recent lackluster trading on this cross.