Currency Update - Monday 25th November 2019
AUD
A subdued end to the week, with no economic data locally to report. Trade deal sentiment received a small boost, President Trump hitting the headlines as he said that there was “a very good chance” to do a deal with China and one was close. He did however add that he told President Xi it could not be an even deal. He also declined to say whether he would support the recent passed Hong Kong bill, saying he stood with Hong Kong but also wanted a trade deal and he warned Xi not to send soldiers into Hong Kong. Tight ranges likely to persist for the session ahead, with market interest focused on tomorrow’s peach by RBA Gov Lowe titled “Unconventional Monetary Policy: Some Lessons from Overseas”. If this speech contains consideration of QE in Australia, AUD will likely feel the pinch.
USD
AUD opens just shy of 0.68 this morning, the USD trading firmly after more solid data releases on Friday evening. US Manufacturing PMI for November printed at 52.2 to beat estimates of 51.4 with Services at 51.6 again beating estimates of 51.0. Released a little later, the University of Michigan Sentiment Survey for November was revised up to 96.8 from a flash reading of 95.7. Wall Street moving higher in late trade to close the week with modest gains, aided by Trump’s comments in favour of a trade deal with China. US economic data will start again tomorrow night with Consumer Confidence, tight ranges should persist for the next 24hours.
EUR
Weak European PMIs on Friday allowed AUD to post late gains to the tune of 0.5%, opening today at the same levels of 0.6153. To the PMIs, and both France and Germany’s Manufacturing numbers showed improvement and beat expectations, however the Services equivalents both slipped. The PMIs for The Zone were disappointing, Manufacturing improved slightly to 46.6 (46.4 expected) but it was Services that had more impact with the print of 51.5 below the forecast of 52.4. Around the same time, new ECB President Lagarde was making headlines as she said that Europe needs a new policy mix with fiscal policy a key element. EURUSD was soon under pressure, allowing the AUD to capitalise as well. Tonight we have the German Ifo Business Climate number.
GBP
AUD closed the week on a high, benefitting from weak UK PMIs and opening this morning having retained the gains at 0.5276. Both the UK Services and Manufacturing PMIs missed the mark on Friday night allowing conditions for AUD gains to the tune of over 0.5%. Looking ahead and this week is devoid of economic data from the UK, however with less than three weeks to go until the UK election, the politicking should offer something to get our teeth into.
NZD
AUD continued its slow slide against NZD on Friday, opening this morning at 1.0587. With little economic data to support the decline, perhaps AUD is still suffering a hangover from last week’s RBA Monetary Policy Meeting Minutes which some interpreted as the RBA considering a further rate cut. Plenty of data to start the week from across the ditch, tomorrow we get Retail Sales and RBNZ Gov Orr speaks as well.