Currency Update - Tuesday 10th December 2019
AUD
In the absence of major macroeconomic news, traders have exercised caution as we head into the second week of December. The US-China trade deal is playing on everyone’s minds but the lack of major developments is causing traders to exercise caution. The tight trading ranges we’ve seen however won’t last as we have a big week ahead. This morning we have Governor Lowe speaking before we move into the House Price Index, and NAB Business Confidence later this morning. Chinese CPI waits for us around lunch time so get your market orders in now in case we see some erratic movements.
USD
We’ve been trading an incredibly tight, 18-pip trading range for the past 24 hours with markets opening this morning around 0.6830. With the upcoming UK election, monetary policy decisions from the Fed and the ECB as well as the December 15th tariff deadline looming, trading is light and dealers are cautious. The big worry for traders with China is that the US is still scheduled to impose tariffs on another $150 billion worth of Chinese imports. The decision may be pushed back while President Trump deals with the growing storm cloud of criminality surrounding his administration however in this case no news is not good news and traders are acting accordingly. While far less widely publicized as the US-China trade deal, the USMCA trade agreement between Canada, Mexico and the United States (meant to replace the North American Free Trade Agreement) has moved forward with Democrats and the Trump Administration nearing a tentative deal with a vote possibly passing it into law by the 18th of December. Still no other major news regarding China and the US coming to terms by the 15th of December which is quickly becoming a downside risk event to the Australian Dollar in the event of a deadline miss. No significant US data today so another subdued and light day of trading is likely.
EUR
AUDEUR has been on lockdown this week and we can expect this to continue with another light day of trading expected. The Australian Dollar is creeping lower with markets at 0.6167 and heading lower as the sellers win out at time of writing. In early European data the German trade balance came in at €21.5 billion, beating the estimate of €20 billion with firmer exports the cause. A positive sign for a country in a technical recession. European equities meanwhile opened in negative territory with the losses only modest. The EZ Sentix investor confidence numbers rebounded in December with the reading of 0.7 up form -4.5 in November. Looking ahead to this evening we have German ZEW Economic Sentiment set to release around 9pm. The survey asks 300 German institutional investors and analysts to rate the relative 6-month economic outlook for Germany so this should provide an excellent insight into the inner workings of the beleaguered European powerhouse.
GBP
The final push of the UK General Election is underaway and with all predicting a Tory victory, Pound Sterling is holding onto its recent run against the Australian Dollar with markets trading just under 0.52. While the election continues to dominate headlines Pound Sterling has a moderate day of data ahead with GDP and Manufacturing Production out this evening. Little else to report as we edge closer to the election on Thursday.
NZD
The Australian Dollar has managed to head off an advancing Kiwi Dollar to flatten out the charts and even creep higher. Markets currently trading at 1.0426, maintaining yesterday’s highs as we look ahead to what will likely to be another subdued day of trading in the absence of news.