Currency Update - Wednesday 20th March 2019
AUD
Another quiet evening on the currency front, AUD opening marginally lower across the baord this morning. Yesterday's RBA monetary Policy Meeting Minutes were released to little fanfare, AUD pushing above 0.71 U.S cents, only to lose those gains overnight as the USD gained some support. Risk Sentiment tailed off the past 24 hours, global stocks closing broadly lower, European bourses bucking the trend. It should be another quiet day locally with the BOJ's Meeting Minutes the only real risk event for Asian currencies. Tonight sees the FED in action, where we are expecting to see a movement in the Fed's outlook and dot plot. The Fed being 'patient' and having a more dovish outlook could see AUD/USD open above 0.71 US cents tomorrow morning, when we then have the latest release of Aussie Employment figures. This is of great importance to the recession debate and is a risk event for the AUD in itself. Resistance is at 0.7150, suppot at 0.7050.
USD
U.S data continues to sour, Factory Orders and Durable Goods Orders both missed their expectation marks and with concerns about the Chinese coming to the trade talk negotiating table, the USD did well to strengthen overnight. Headlines from various U.S trade officials who were concerned of China 'walking back trade offers' meant U.S bourses closed marginally lower. With the Trump Xi meeting pushed back to June, China seems to be playing hardball, looking for reciprocal enforcement for any deal to be made. Markets seem to be underestimating the chances of a no deal, having said that the AUD and stocks would rally significanlty if a deal was pushed over the line. The Fed are the main focus this evening, we'll be listening for any changes to the balance sheet normalisation run-off and an expected dovish handle from the central bank.
EUR
It was all quiet out of Europe, the only data of note being Italian Trade Balance, which slightly missed targets. Eurodollar traded in a very tight range, opening around 1.1360 this morning. EU trade Officials made it clear to the U.K that a Brexit delay was not a given and that the U.K must come forward with firm proposals for an extension to be granted. It is worth noting that any grant has to be unanimously approved by each member state. Germany's Merkel is pushing for a long extension. Stocks made healthy gains in Europe, led by the DAX at 1.1%. There's no primary data released this evening, the U.S Fed will be in focus, Euro to react this this major announcement.
GBP
With the House Speaker denying May another Withdrawal Vote it's back to the drawing board for the British P.M. Time is running out and the chances of a mistaken hard-brexit are increasing. You wouldn't have thought so by the way the Pound traded overnight however, Sterling opening above 1.33 against the USD and towards recent highs against the AUD. The U.K Government need to request an extension from EU Beaurocrats, an election or referendum not a totally discarded outcome for the time being. The Pound was helped by Average Earnings figures being 0.2% better than expected and Unemployment figures, employment now the strongest in the U.K since 1975! U.K Inflation numbers will be important for direction this evening.
NZD
The Kiwi rallied 20 pips against the USD overnight, before falling down to the comfort level of 0.6850. N.Z Current Accouint figures released this morning marginally beat expectations, apart from this expect another quiet days trade in the Kiwi, AUD/NZD well within its recent tight range.
Today’s data
USD:
FOMC Rate Decision
GBP:
Feb CPI