Currency Update - Friday 29th March 2019
AUD
The AUD has unwound somewhat in recent days but with the current market conditions considered, our Aussie battler has done just that, battled on. We open this morning in the upper ranges of the 0.70 handle and the support of 0.7050 remains steadfast, holding up despite continued pressure and a resurgent USD. There has been little in the way of local data this week and the day ahead is once again devoid of any key notes, Private Sector Credit released at 1130 will close out the calendar for the week, no doubt to little fanfare. Brexit, EU/Global growth concerns and closer to home the ongoing concern surrounding the Chinese economy, fueled in some part by the ongoing Sino/US trade wars, all continue to weigh on the AUD. Yet despite all of these negatives our local unit remains defiant, can this continue? A close above 0.7150 would aid in convincing us the AUD can push higher, we have Chinese data over the weekend before the local calendar heats up again next week. The RBA meet on Tuesday and although there is still noise for looser policy in 2019 it seems a near term cut is likely off the table.
USD
USD strength continues to play out but the moves are certainly not all in the one direction, AUD/USD briefly pushed back above the 0.71 handle overnight before the Big dollar took back those gains. The Kiwi has recovered some of the lost ground inspired by the dovish RBNZ and markets move forward. Ongoing growth concerns will continue to weigh on commodity based currencies and we do expect USD strength to continue. Brexit, China and ongoing trade wars keep sentiment in check for the time being and developments are fueling volatility, GBP/USD is jumping around on headlines out of the UK. Data wise the US GDP number fell short of the forecasted 2.3% at 2.2% after a revision down from 2.6%, a similar story on the Personal Consumption print, revised down from 2.8% to 2.5% missing expectation by 0.1%. Core PCE for (Q4 2018) was revised upward though to beat expectation of a flat 1.7% and print at 1.8%. Jobless claims were better, both Initial and Continuing Claims beat expectation. The USD remained bid throughout the overnight trade despite the data, gaining a further 0.3% on the Dollar Index to close at 97.24. A host of releases tonight for traders to digest, the highlight being Core PCE for the month of January.
EUR
Eurozone Consumer Confidence printed as expected, AUD/EUR pushed marginally higher overnight, Eurodollar tracked sideways despite USD strength. German CPI printed behind expectation, the monthly measure at 0.2% (0.4% exp), the annual figure also lagged. European equities were a mixed bag, risk appetitie muted for the most part. It should be a relatively quiet end to the month, U.S data will be the highlight. French CPI and the EU measure released this evening.
GBP
Traders finally priced in the increased chances of a no-deal Brexit overnight, the Pound tanking against the USD, falling from 1.3260 to 1.3044 this morning. The AUD's response was more muted, AUD/GBP rallying to 0.5420. News the U.K government would split the Withdrawal Agreement and the Political Declaration was enough for House Speaker Brecow to approve a meaningful vote on Friday. Final U.K Q4 GDP is released this evening. Brexit headlines to remain the focus for traders.
NZD
The Kiwi has found support at 0.6770 against the USD, after large falls in NZD value post RBNZ. The USD was stronger overnight against a basked of currencies, the Kiwi holding up well all things considered. Weekend volatility will be USD centric, Brexit will also dictate risk flows along with any progression with the U.S/China trade deal.
Today’s data
AUD:
Private Sector Credit
USD:
New Home Sales, Uni of Michigan Sentiment, Core PCE and Deflator, Personal Spending
EUR:
March CPI, French CPI
GBP:
FInal Q4 GDP