Currency Update - Friday 8th November 2019
AUD
Risk sentiment has bounced back overnight with news that headway was being made in the trade negotiations between China and the US. Both parties have agreed to roll back tariffs in phases as they continue to work towards an agreement. Equities and the Australian dollar benefitted from the news with the latter holding or rallying across the majors. Not a lot of data today outside of the RBA Monetary Policy Statement at 11:30am this morning. Traders will be looking for any new information that could provide insight into future rate cut decisions so look out for hawkish comments to firm the Aussie and conversely dovish statements to soften.
USD
The Australian Dollar has bounced back from yesterday’s lows to push again above 0.69, albeit temporarily. Boosted by the positive swing in risk sentiment the Aussie once again tested the difficult resistance above 0.69 but at least at this point appears unable to break out higher. We’re currently attempting a consolidation at 0.69 but look towards support levels of 0.6885 if the offers win. To trade, and it was reported that China and the US will remove their respective tariffs when the first phase of the trade deal is signed. Gao Feng said “China and the United States must simultaneously cancel some existing tariffs on each other’s goods for both sides to reach a “phase one” trade deal. The proportion of tariffs cancelled must be the same, and how much tariffs should be cancelled can be negotiated. Both sides have agreed in the past two weeks to cancel additional tariffs imposed during their months-long trade war in different phases. On the data front, US weekly jobless claims were mixed with initial claims modestly better than expected at 211k though continuing claims were modestly worse than expected at 1.689. Little other data to report outside of Preliminary UoM Consumer Sentiment tonight.
EUR
The Australian Dollar pushed to a high of 0.6258 on the Euro before the offers took it off the boil. With markets currently trading at 0.6243 we’re still at close to 2 month highs with some historical support helping the Aussie consolidate. On the data front we saw the Autumn 2019 Economic Forecast which painted a bleak picture of falling demand and a weakening global economy. Also highlighted was a contraction in manufacturing, which is starting to spill over to other parts of the economy. It wasn’t entirely bad news with the report also advising that a strong labour market has helped sustain private consumption and domestic demand however it was enough for traders to get their offers in for Euro and help push the AUD higher. Some low impact Euro data out later today but otherwise a quiet finish for the week.
GBP
The Australian Dollar has pushed higher against Pound Sterling hitting 3 week highs of 0.5391 after the Bank of England endured some surprising dissent among their ranks. While the Bank of England predictably left rates on hold yesterday we did see two members vote for a 25 point cut. The accompanying statement noted that policy easing could be needed if Brexit risks or global risks worsened while growth forecasts for 2020 and 2021 were downgraded. Little other data or news to finish off the week.
NZD
Swings and round abouts for the Australian Dollar today after a big push yesterday up to a high of 1.086 before the gains were largely erased back down to 1.083. The Antipodeans were the main benefactors after positive news from the 35th ASEAN summit where RCEP, the world’s largest free trade agreement, was agreed on in principle. Australia reported a surge in its trade surplus on the back of strong exports and this helped push Aussie higher. No other data or news to finish the week.