Currency Update - Friday 6th December 2019
AUD
The Australian Dollar is contending fairly well after some disappointing retail and trade figures yesterday. On the Retail Sales front traders were looking for a reading of 0.3% and instead saw a print of 0.0% for zero change. Soonafter, the Australian Trade Balance reading was $4.5bio versus a $6.1bio forecast. Imports rose 0% and Exports fell 5%. The disappointing figures put selling pressure on the AUD for much of yesterday and in the overnight US session. Meanwhile the OPEC meeting that has been underway over the past 24 hours continues, with tonight’s press conference rescheduled to allow more time for discussion. So far OPEC is looking to reduce crude oil output by an extra 500,000 barrels that has helped the price of oil soar. Looking ahead for today we have a fairly quiet day on the data front with primarily low impact news outside of the ongoing OPEC meetings.
USD
Despite the disappointing trade and retail figures the Australian Dollar has held onto its position above 0.68, aided by broader USD weakness. The US jobless claims dropped to 203,000 from 213,000, while the international trade deficit dropped to $47.2 billion from $51.1 billion. US Factory orders increased by 0.3% in October, which was bounce back from the 0.6% decline endured in September. The big international news is of course Trump’s impeachment enquiry where House Majority Leader Pelosi formally announced that President Trump would be impeached. However, the impeachment the Democrats envision would require support from the Republicans and so far the Republican camp is closing ranks. Time will tell if cracks begin to show and if Trump’s recent erratic behavior over NATO produces any hint of rebellion within the Republican Party. In regards to the ongoing US/China negotiation, the two sides remain at odds over the value of farm purchases. If one were to take a glass half full approach, one may interpret this as a promising sign that the two sides have at least agreed to tariff rollbacks and now are quibbling over the numbers.
EUR
There’s a shortage of good news in Europe amid a broad sell off of key industries in equity markets, which helped to keep AUD/EUR losses short and down to key support of 0.6150. The FTSE 100 finished the day firmly in the red as mining, financial, energy, healthcare as well as consumer stocks all ended with heavy selling off the back of poor economic data. The retail sector is suffering and seemingly the only hope in sight is with a US-China trade deal. With risk sentiment poor for much of this year traders have been quick to sell off European assets that has kept the Euro in the doldrums. The latest data coming from Europe came from German factory orders in October that fell by 0.4%, disappointing expectations of a 0.4% increase. Spanish IP fell by 0.4% in October, meeting the grim forecast. Looking ahead it’s a quiet day for the Euro that shouldn’t see significant change in AUD/EUR rates heading into the weekend.
GBP
Pound Sterling is on the run with the Australian Dollar falling to 0.5191 with a Tory victory in sight and Brexit all but confirmed for 2020 as more and more polls indicate a win for Boris Johnson. Labour continues to chip away at the lead however it may be a case of too little too late, though time will tell whether the polls will get this one right. A relatively quiet day for the UK outside of the election race with no data to report yesterday nor ahead for today.
NZD
The Australian Dollar is in a state of shock and Orr as Kiwi breaks out higher yet again following the Reserve Bank of NZ releasing its final decision following a comprehensive review of the banking sector. Governor Orr said the decisions to increase capital requirements are about making the banking system safer for all New Zealanders and will ensure bank owners have a meaningful stake in their businesses. The changes to the banking sector will be implemented over the next seven years to give banks plenty of time to adjust and to make the transition smooth.