Currency Update - Thursday 28th November 2019
AUD
The trade optimism continues as traders are hopeful the US-China trade talks will bring about an agreement in the next few weeks. The discussions are in the ‘final throes’, according to President Trump, and from the Chinese side, it was reported they were ‘resolving relevant problems’. Traders are cautious no to get ahead of themselves too much as nothing is a done deal until everything is signed. The US are still scheduled to impose fresh tariffs on Chinese imports next month, but with the way things are going, we might have phase one of the trade deal signed by then. With that said, the reaction so far on the currency side has been very subdued with the rising sentiment acting as added support for a beleaguered Australian Dollar. On the data side it’s been a relatively quiet week for the Australian Dollar and yesterday the only significant source of AUD data came from a Construction Work Done release that fell only -0.4%, beating an expected drop of 1%. Ahead today we’ve got Private Capital Expenditure q/q out later this morning.
USD
The Australian Dollar has continued to trend down against the USD as the greenback firms off the back of a string of positive economic data with markets opening this morning at 0.6775. Added strength came from the latest Fed meeting where the central bank suggested that they won’t be moving rates for some time. The US economy grew by 2.1% in the second quarter according to the second-estimate reading. The Fed cut rates three times since June, and it is fair to say we have yet to see the full impact of the cuts, so the final quarter might be in for a lift. Jobless claims dipped to 213,000 from the 227,000 while personal consumption increased by 0.3% meeting forecasts. The updates painted a positive picture of the US economy which has firmed up the USD and when coupled with rising trade optimism saw US equities soar. No other significant US data for the rest of the week so expect news over US and China to largely dictate AUD/USD price.
EUR
Euro has taken off some of the AUD’s gains yesterday coming down to 0.6159 at time of writing. European equities were mostly higher in early trade as French Consumer Confidence came in above expectations of 103 with a 106 reading – 2.5 year highs. Soon after Italian consumer confidence came in 108.5, short of 111.7 expectations. We also saw slightly weaker German import data which recorded a price slip of 0.1% - a marginal change but one that underlines the soft demand in Europe’s largest economy. It’s been a quiet week of trade for AUD/EUR with the pair stuck in a tight 20 pip trade range since Monday. Ahead today we’ve got German Preliminary CPI and then tomorrow a glut of minor European data so the quiet trading may very well continue for the rest of the week.
GBP
The Australian dollar has taken a tumble after a solid run up that begun on Tuesday and lasted until yesterday afternoon with the latest polling reports signaling a Conservative win and pushing the Aussie down to 0.5244 at time of writing. The reports came from a UK journalist who advised that the yet to be released new election polling showed the Conservatives with a significant majority. An otherwise quiet day for Pound Sterling and little scheduled to finish up the week. Expect polling data to dominate currency news as we edge closer to election day.
NZD
The Australian Dollar has come off the lows recently suffered against the Kiwi with markets at 1.0555 at time of writing. While acting as little more than support at this stage the slight move up came from Governor Orr’s speak yesterday morning where he confirmed that vulnerabilities in the financial system remain elevated. Orr continued saying that more effort is required to ensure the system remains resilient. Little other significant data to report for rest of the week.