Currency Update - Monday 4th November 2019

AUD

With a week of solid local data prints behind, AUD starts another busy week of data on the front foot, also supported by favourable global risk conditions. Today we get Retail Sales figures before the highlight of the week, tomorrow’s RBA’s Melbourne Cup day interest rate decision at which markets are all but positive there will be no change to interest rates (only 6% chance of a cut). Last week’s solid CPI figures are likely to see the RBA adopt a wait and see approach to monetary policy after three consecutive cuts already this year.

USD

AUD closed last week on a high, managing its first weekly close above the 0.69 handle in 3 months and opening only slightly lower at 0.6912 at time of writing. Friday night’s employment data from the US was mixed; The US economy added 128k jobs in October, down from a significantly positively revised 180k though easily accounting for expectations of 85k. The unemployment rate rose slightly to 3.6% as expected, however Average Hourly earnings surprised to the downside, rising 0.2% against expectations of a 0.3% gain. To trade, and White House officials said that phase one on the trade deal with China was progressing with both sides working hard to conclude negotiations. Wall Street was stronger to the tune of about 1%, enjoying the broader positive risk sentiment and local stocks likely to follow suit today. A quieter week of US data this week, Tuesday’s ISM Non-Manufacturing PMI the only tier one data piece on the calendar.

EUR

AUD opens at 0.6177 this morning with the grind higher toward the 0.62 level running into headwinds. A steady stream of data from the EU starts with Manufacturing PMIs tonight, recent contractionary manufacturing numbers of from all major EU economies except France are unlikely to see significant improvement with Brexit continuing to drag on. New ECB President Lagarde also speaks tonight.

GBP

Tight trading ranges against GBP continue, AUD opening this morning in the middle of the weekly range at 0.5342. The Bank of England is in action later this week, it’s widely accepted that they will leave rates on hold at 0.75%. UK election headlines will no doubt also begin to circulate from tonight, carrying extra influence with the Brexit implications associated with the fortunes of the competing parties.

NZD

AUD opens in the middle of the last month’s trading range at 1.0745 this morning. NZ Employment data on Wednesday will be the focus of trans-Tasman economic data with the Unemployment Rate expected to tick higher from 3.9% to 4.1%. Combined with the busy local data calendar, there’s potential for AUD to retest the 1.08 levels mid-week.