Currency Update - Tuesday 2nd April 2019
AUD
Market sentiment remains elevated and is reflected, in the well supported Aussie dollar, AUD/USD traded in a tight range but the close was still above the 0.71 handle and the AUD remains bid. Commodity markets have added further support to the local dollar with a rally of 1% for the CRB, largely due to the 2.4% rise in the price of black gold but Natural Gas and Iron Ore have also surged. The positive sentiment coupled with weaker US data overnight has provided the AUD with a solid bid tone ahead of the RBA later today. No change is expected from the central bank and one would doubt there will be much adjustment to the rhetoric, that said the market continues to price in cuts for the latter half of 2019 so comments will be closely scrutinized. This evening we have the annual budget, the treasurer is promising further tax relief for the nations workers and increased infrastructure spending. AUD could be setting up for a run higher if the RBA statement is as expected, a break above 0.7150 will set up a test of 0.72, support remains solid at 0.7050.
USD
US markets also enjoyed a solid night fueled by upbeat sentiment, the Chinese shock beat on their PMIs has fueled the rally and US equity markets took the baton and ran with it. All three indices were higher by 1.1-1.2%, the USD trade was fairly subdued, the Big dollar within range versus the majority of its peers. Retail Sales printed and was a miss, falling by 0.2% for the month vs a forecast of a 0.2% gain but revisions to the headline numbers added 0.5% and prevented any major US route. Later in the session we had the ISM numbers and they provided the big dollar with a bid; ISM Manufacturing hit 55.3, up from 54.2 and beating expectation of 54.5, Prices Paid increased from 49.4 to 54.3 also beating their forecast of 52.5. Construction Spending and Business Inventories rounded out the evening with further upbeat prints and the USD rallied into the London session and beyond. Durable Goods to print tonight in what is a packed week of data. Headlines surrounding the closing of the Mexico Border and Sino/US negotiations will also continue to provide volatility, the DXY is currently sitting at 97.37 for a 0.14% gain.
EUR
Risk was well and truly on overnight, with major bourses closing up between 0.5% & 1%. The AUD remains well bid against the Euro as European Manufacturing PMI's mostly missed thier mark. Italy, France and Germany all fell behind expectations, Spain printed well ahead of forecasts at 50.9 (49.7 exp). The EU measure printed at 47.5 (47.6 exp). The USD was stronger overnight, sending the Euro back close to support at 1.12. Data is a little thin on the ground this evening with Spanish Unemployment and Monthly PPI set for release.
GBP
All four Brexit motions voted on in the commons overnight failed to reach a majority, leaving the U.K even closer to a no-deal Brexit on 12th April. British Politicians cannot make up their minds it seems, enraging the country and making negotiations with the EU even more fraught. U.K Manufacturing PMI shot the lights out at 55.1 (51.2 exp) as general folk stockpile ahead of an ever increasing chance of a hard Brexit on 12th April. GBP/USD traded down to 1.2978, before pulling back some ground to open above 1.30 this morning. The AUD trades sideways in the mid 0.54's. U.K Construction PMI is released this evening, but before that today's RBA rate announcement will be the focus for local traders. The chances of a rate cut are small, but with a chorus of central bank pessimism of late, anything is possible.
NZD
AUD/NZD jumped to 1.0470 this morning as Kiwi Business Confidence collapsed (-29 v's -17). The Kiwi lost the 0.68 handle against the USD, falling to 0.6770 this morning. We have a dairy auction overnight. Kiwi to react to risk flows and movements in the big dollar.
Today’s data
AUD:
Feb Building Approvals, RBA Meeting, Commonwealth Budget
USD:
Durable Goods Orders
EUR:
February Unemployment Rate
GBP:
Construction PMI