Currency Update - Tuesday 26th November 2019
AUD
Sentiment is on the improve with solid gains on global equities as trade deal optimism picks up. While the Australian Dollar has moved broadly lower this week if risk continues to rise we should expect to see the bids start coming in for the AUD. The positive news came from the Chinese newspaper Global Times which reported that phase one of the proposed trade deal between US and China was “very close” and that China remains committed to a phase two or three of a deal on equal footing. Global equities were first to pick up but so far there’s been a quiet reaction on the currency markets. Looking ahead for today we have RBA’s Debelle speaking in Canberra at 10:50am Sydney time where he’ll be speaking on “Employment and Wages”. There is likely to be some AUD downside risk here where dovish comments may prompt some selling pressure on the AUD. We also have Governor Lowe speaking this evening at 8:05pm who will be speaking on “unconventional measures” that can be utilised as a part of a broader monetary policy. These unconventional measures may mean quantitative easing and this may also prompt a sell off on the Aussie.
USD
The Australian Dollar has fallen from yesterday’s highs of 0.68 down to where markets open today at 0.6775. The USD is broadly firmer despite reports that phase one of the alleged trade deal is nearly here. US Press reports said that the US and China had reached a broad consensus on the phase one deal. US equities responded immediately with all-time highs for the S&P 500 and Nasdaq whilst commodities also advanced. On the data front US Chicago Fed National Activity Index fell to 0.71 in October, down from -0.45 and worse than expectations of -20. The Dallas Fed Manufacturing Activity Index for November rose to -1.3, up from -5.1 and better than expectations of -3.8. Muted reaction to the data from the currency markets. Out today we have US October wholesale inventories, new home sales as well as November consumer confidence.
EUR
Selling pressure has sent the Australian Dollar lower falling to a low of 0.6147 before slightly coming up to 0.6155 at time of writing. With a relatively quiet reaction to the latest US-China news the Australian Dollar remains largely bound within a tight range against the Euro for latter half of November. A relatively quiet 24 hours for Europe with the biggest news coming in the form of the German IFO survey which came in at 95.0 as expected with both the current assessment and expectations improving from admittedly low levels. No other data today so expect a quiet Tuesday for AUD/EUR.
GBP
The Australian Dollar has sunk against the Pound falling to lows of 0.5245 before consolidating slightly higher. Pound Sterling is moving up after the most recent poll has shown Conservatives still maintain a lead in the polls, albeit a lead that has diminished somewhat. The markets are viewing the Conservative party as pro-business so pro-conservative poll numbers have generally correlated to increased GBP strength. An otherwise quiet today for the GBP news.
NZD
Kiwi strength continues with markets falling at time of writing off the back of strong NZD Core Retail Sales. The Kiwi has been putting runs up on the Australian Dollar for much of November and strong Retail sales data has pushed us even lower. Moving forward we have tomorrow at 7am the RBNZ Financial Stability Report.