Currency Update - Monday 1st April 2019
AUD
The AUD closed out last week with no data of note to consider after a very quiet week data wise from the local calendar, in contrast the week ahead is a busy one, Kicking off today with the NAB Business Confidence, Securities Inflation Data and the AiG Performance of Manufacturing Index. The previous week closed with recovered sentiment and over the weekend the AUD managed to push to highs of 0.7125, we retain the 0.71 handle on open this morning but have trimmed some of those gains to sit at 0.7110. Investor sentiment is high with optimism surrounding the Sino/US trade negotiations and despite the ongoing Brexit confusion a deal does look likely in the near term even if that deal is, no deal. Chinese data over the weekend was also upbeat, adding to the AUD bid tone. Chinese PMI rose to 50.5, up from 49.2 and ahead of forecast of 49.6, the highest level in over six months and the largest monthly increase in seven years. We have the RBA tomorrow ahead of the Budget to kick off a busy week, traders will be listening intently for any indication of a softening policy stance. AUD slowing on approach to 0.7150 and support is found at 0.7060/50.
USD
U.S data printed to the downside to close the week. Personal Income and Spending declined, along with Core PCE. Chigago PMI printed lower, whilst the Uni of Michigan Survey along with New Home Sales beat expectations (4.9% v's 2.1% exp). Risk sentiment improved however, U.S stocks climbing 0.8% higher, taking the quarterly rise to over 13% in the S&P. Investors are expecting the Fed to remain dovish, with QE4 a possibility later in the year if markets turn funky. With interest rates set to remain flat in 2019, large equity players are gradually entering the market once more, which has a positive effect for global risk appetite, typically AUD positive. White House Commentator Kudlow said the FED should immediately cut rates by 50 bps, this week sees more commentary from FED members. THis evening's data dump is a big one, with the release of Retail Sales, Constructions Spending, ISM Manufacturing and Markit Manufacturing PMI. Friday's Non-Farm Payrolls again the pick of the data.
EUR
European equities rallied over the weekend as positive sentiment surrounding a U.S/China trade deal helped lift the mood in Asia, Europe and the U.S. EU data printed better than expected with German Retail Sales rising to 0.9% in February (-1% exp). German Unemployment remained at 4.9%, French CPI YoY was slightly below expectations at 1.1%. The EU's Tusk called for an emergency EU summit on April 10th as the U.K parliament again failed to reach a majority on any withdrawal agreement vote. The CAC closed up 1%, other EU bourses closed roughly 0.5% in the black. Manufacturing PMI's and Flash CPI Estimates are released this evening in what is a busy data week for the globe.
GBP
The Pound's volatility continued over the weekend, with traders and investors discounting the increased likelihood of a no-deal Brexit into the Pound rate. Parliament again voted down any form of a withdrawal agreement, the likely outcome either a lengthy extension, or a no-deal Brexit on April 12th. The EU steps up preparations for a no-deal Brexit, worrying investors. The AUD managed to eek out gains of close to 1%, opening this morning at 0.5457. Chinese PMI was released over the weekend, a surprise lift above 50.0 saw the AUD well bid against its crossses. It's PMI week this week, Manufacturing PMI released this evening, otherwise Brexit headlines will continue to move the Pound for the most part. Time is ticking for U.K politician's and the country as a whole.
NZD
AUD/NZD took advantage of positive risk sentiment over the weekend despite a more dovish outlook from the RBNZ. The AUD opens higher at 1.0431, NZD/USD aso higher at 0.6814. Business Confidence (released tomorrow) if the data highlight of the week. NZD to react to USD flows and risk sentiment for the most part this week.
Today’s data
AUD:
March House Prices, NAB Business Confidence Survey
USD:
Retail Sales, Construction Spending, ISM Manufacturing, Markit Manufacturing PMI
EUR:
Markit Manufacturing PMI's, March Core CPI
CNY:
Caixin Manufacturing PMI