Currency Update - Friday 29th November 2019
AUD
The potential of President Trump’s decision yesterday to back the Hong Kong Human Rights to jeopardise US-China negotiations has stoked the fears amongst traders who reacted by selling off risk assets. The legislation backing pro-democracy protesters in Hong Kong was unanimously approved by the US Senate and all but one lawmaker in the House of Representatives, so Trump really had no choice but to sign the bill into law and China would have been expecting such an event. China’s foreign ministry spokesman Geng said that the US should stop interfering in China’s internal affairs and that the HK meddling may hurt ties and cooperation. More menacingly, Geng said that the bill would be met with strong counter measures, so perhaps retaliation is still to come. Recent progress on the trade front has been eroded to a degree with risk sentiment taking a hit, traders unsure if this bill will directly jeopardise the trade deal. With Thanksgiving holidays underway in the United States expect a quiet end to the week without any significant Australian data scheduled for today.
USD
Traders trimming risk positions saw the Australian Dollar sold from the highs of yesterday near 0.68 down to the lowest levels since October before support was found around 0.6768. With fresh concerns over US-China negotiations as China warns the United States of retaliation, the USD has firmed across the board. North Korea also added fuel to the fire, launching two missiles that crashed into the sea between North Korea and Japan. Given the timing of the missile launch and Thanksgiving this can be seen as an antagonistic move by the rogue state adding to global fears. The US stock market was closed however given the damage done to European equities in the last 24 hours and the Australian Dollar we have sufficient confirmation that risk is most decidedly off. No US data to report.
EUR
The Australian Dollar has continued to trade within the narrow range of 0.6167 and 0.6126 and we open this morning exactly between those levels. With low liquidity thanks to the US holiday this was not enormously unexpected and we should expect the range trading to continue for the rest of the week. European equities were among the assets hit amid complications over US and China negotiations. Another surprise came in the form of the EZ economic confidence reading that came in slightly above forecast which helped the Euro find some life. This evening we have a host of low impact data to inform markets heading into the weekend with the marque event coming in the form of the CPI Flash Estimate.
GBP
The Australian Dollar has lifted against Pound Sterling, coming off recent lows to recapture familiar levels of 0.5243. The focus remains on UK politics with the most recent poll released yesterday predicting that Boris Johnson’s Conservative Party will win 359 seats against 211 for Labour. However, the fact that every other opinion poll has been hinting at a narrowing lead for the Tories has breathed some life into AUD/GBP. A very quiet day for the UK with little else other than some low impact data to finish the week.
NZD
The bearish channel the Australian Dollar has found itself locked in for much of November may be beginning to level off as we picked up some bids to push AUD back up to 1.055 at time of writing. After yesterday's stronger than expected ANZ NZ Business Outlook survey it was looking like Kiwi would continue its relentless march on its Antipodean counterpart, however as Trump signed off on the Hong Kong Human Rights bill the Kiwi copped the worst of the selling as traders moved risk off the books. Little other data to report today to finish up the week.