Currency Update - Monday 2nd December 2019
AUD
AUD closed the week down, unable to shake off US/China tensions over Hong Kong. Both measures of Chinese PMI data released on Saturday were good, showing expansion and beating expectations; Manufacturing PMI printing at 50.2 (49.5 exp) and Non-Manufacturing PMI at 54.4 (53.1 exp). December is upon us and as markets opened AUD received a small boost from the Chinese data to start the week on the front foot. A big week of local data ahead, starting with local Building Approvals at 11.30 this morning, followed by more Chinese data in the form of Caixin Manufacturing PMI. Tomorrow the RBA is in action with its last meeting before the holiday break (no meeting in January) and markets are expecting just an 8.5% chance of an interest rate cut. The data doesn’t stop there, with GDP on Wednesday and then Retail Sales and Trade Balance on Thursday. With plenty of key local data points on show this week, perhaps some volatility can return to markets before the end-of-year lull. Importers are keen to buy on any spikes, market orders handy to take advantage of potential upside.
USD
With the US largely on holiday at the end of last week, trade volumes were low and AUD was lethargic, opening this morning close to 6 week lows at 0.6770. The holiday hangover will be shaken off quickly however, with a solid week of data from the US to look forward to; PMIs (purchasing managers’ index) tonight (Manufacturing) and then Thursday (Non-Manufacturing), and then the monthly employment report is released on Friday evening. Also the 15th December deadline for the next round of trade tariffs on China is approaching fast, so markets are eagerly awaiting some form of progress from the two leaders, at the very least a truce/delay in further trade penalties.
EUR
A string of decent data releases from the EZ on Friday have pushed AUD lower, currently trading at 0.6140 which is towards the lower bound of the 3-month trading range.TO the data, and the German unemployment rate remained steady at 5% with the EZ equivalent at 7.5%. EZ CPI came in at an annual rate of 1% which beat the estimate of 0.9%. With AUD vulnerable due to US/China Hong Kong tensions, the EUR was able to capitalise. A slew of European PMI data is due tonight, followed by testimonial from ECB President Lagarde.
GBP
AUD forged new 5-month lows against GBP in late trade on Friday, opening slightly off the lows this morning at 0.5240. The lows a result of renewed trade tensions between US/China after the US signed the Hong Kong Human Rights Bill to the ire of China. Staying true to the global trend, the UK also will release PMI data this week, the only data point of note. Boris remains the firm favourite to win the UK election which takes place on Thursday week, the GBP remaining appropriately strong.
NZD
AUD has continued a slow, linear retreat against NZD for almost a full month now, losing 1 ½ cents over this time period and landing at current levels of 1.0515. Plenty of local data this week may shake or accelerate the trend. The NZ data calendar is pretty bare, with RBNZ Gov Orr’s speech on Thursday morning the highlight.