Currency Update - Monday 9th December 2019
AUD
A busy week of international happenings ahead with the Fed & ECB due to have their last meetings for the year, as well as Thursday evening’s UK election. Domestically things are quieter, tomorrow offers the highlight with a speech from RBA Gov Lowe, the House Price Index and NAB Business Confidence numbers. China is also in action with CPI tomorrow however Wednesday’s credit figures will be closely monitored for signs of pickup in investment.
USD
AUD remained pretty well supported last week, spending four out of five days above the 0.68 handle, opening at 0.6840 this morning. The US employment data from Friday was pretty impressive, a massive 266k jobs were added in November (181k expected) and the Unemployment Rate dropped unexpectedly from 3.6% to 3.5%. Whilst the USD was strong in the aftermath, most of its gains were against EUR and JPY, the AUD perhaps avoiding selling due to the risk optimism associated with strong numbers from the world’s biggest economy. After a slow start to the week, US data will pick up on Wednesday evening with the Fed’s last meeting for the year at which they will also have a press conference. The 15th Dec trade tariff deadline is also looming large (this Sunday!), markets are hoping for a delay/truce with China, or even better a phase 1 trade deal. If the tariffs come into effect without intervention the AUD will no doubt feel the effects heavily.
EUR
AUD finished the week strongly against EUR, opening at 0.6184 this morning. EUR was on the back foot due to the bumper US employment data which was putting pressure on the single currency, but also because German industrial production fell by 1.7% in October, well short of the 0.1% gain that was forecast. The annual decline of 5.3% was the biggest drop since 2009. Plenty of EUR data scattered throughout the week, including the ECB’s monetary policy meeting and presser on Friday evening, however the UK election on Thursday night probably is of most importance given the Brexit flow-on effects associated with the outcome.
GBP
AUD is just hanging on to the 0.52 handle to start what should be a fateful week for the GBP. The UK election will occur on Thursday evening with most polls showing a strong win for Boris Johnson. The result will most likely be decided before we get to work on Friday morning, a Boris win should see the GBP strengthen against all comers. A strong Boris majority will pave the way for a Brexit deal before the end of January, finally bringing an end to the saga, three years after the initial Brexit referendum. It will be nice to write about something else.
NZD
The grind lower continues, AUD opening at 1.0417, having slowly given up one cent over the last week. AUDNZD is now at 4 month lows against its Trans-Tasman cousin. Friday’s Business NZ Manufacturing Index is the only significant data from our neighbours for the week.