Currency Update - Wednesday 27th November 2019

AUD

The AUD was firm after last night’s speech from RBA Gov Lowe saying “There may come a point where QE could help promote our collective welfare, but we are not at that point and I don't expect us to get there”. He said that if QE was to be undertaken Government bond buying would be the most likely method used, with private asset purchases unlikely. He ruled out negative interest rates and stated that the effective lower bound is not likely 0.5% as many had expected leaving room for two more cuts should the need arise. So whilst QE was mentioned as was suspected, it was done so to prepare markets not to expect such measures, which left the AUD unscathed. To the trade negotiations and risk was buoyant, Trump saying that they were in the “final throes” of getting the deal done with China. Looking forward and today we get Construction Work Done for Q3, although with volatilities so low, large intraday movements remain unlikely.

USD

AUD opens slightly firmer this morning at 0.6789 with a trade deal imminent and mixed data from the US overnight. US equities enjoying the positive trade outlook pushing to new all-time-highs. The US Trade Deficit shrank to $66.5bio, beating estimates of a $71.0bio deficit, although Consumer Confidence figures showed modest decline and missed expectations (125.5 vs 126.9 exp). Tonight we get a flood of data from the US (see bottom) with the highlight being the Chicago PMI. Support for AUD sits at 0.6750 and resistance around 0.6830.

EUR

AUD opens effectively unchanged at 0.6156 this morning, very little data coming from The Zone overnight and nothing of note due until Thursday evening with German Prelim CPI. In the absence of a finalised US/China trade deal which should result in AUD upside, narrow trading ranges likely to persist on this front.

GBP

AUD slightly firmer here as well this morning to the tune of just under 0.5%, 0.5275 the open. The AUD upside a result of factors outside of the UK (see above) with zero data emerging from the UK overnight. No data due tonight either, UK election developments the only possibility of breaking the silence and adding some movement.

NZD

AUD continuing a slow-motion slide against the NZD, mid 1.05s at the moment. Yesterday’s upbeat Kiwi Retail Sales numbers keeping the momentum in favour of the NZD. RBNZ Gov Orr is speaking at the time of writing and tomorrow morning the ANZ Business Confidence numbers may also add some spice to the mix.