Currency Update - Monday 29th April 2019

AUD

The AUD opens marginally higher against the US this morning after reaching fresh lows sub 0.70 last week.  The AUD traded as high as 0.7060 before settling higher than Friday's opening levels of 0.7017.  The AUD is susceptible to an extension of last weeks' broad based USD strength, where it broke above key DXY resistance at 97.70.  The weekend's U.S data, whilst looking great on the surface, was interpreted as negative, weighing on the USD.  Risk sentiment remains well bid, the ASX and U.S stocks close to record highs, supporting the local unit.  The AUD was also bid on news President Xi could travel to the U.S as early as June.  Commodities remain elevated, the price of oil fell 2% over the weekend, on account of verbal intervention from Donald Trump.  Local data takes a back seat to that in the U.S this week.  Private Sector Credit is released tomorrow, with second-tier releases throughout the rest of the week.  The AUD fell 1.5% last week, but remains above important support at 0.6980.  The Chances of an RBA rate cut in May lept to 40% after shockingly low inflation numbers for Q1 however, which should keep the AUD contained.  

USD

The USD seesawed over the weekend, a reaction to GDP data.  The USD initially strengthened on a strong headline Q1 GDP read, which beat expectations of 2.3% (3.2% actual).  Personal Consumption rose to 1.2% (1% exp), Core PCE fell to 1.3% however (1.4% exp).  Bond traders were the first to sell the USD after discovering the majority of GDP growth was found in inventories.  To rub salt into the wound, White House Economic Advisor Kudlow announced that slower inflation could open the doors to a rate cut.  The big dollar fell further after the announcement.  In other news the University of Michigan Sentiment Survey printed higher than expected at 97.2 (96.9 exp).  The Antipodean's made steady gains against the USD in the second half of U.S trade, the AUD unable to hold onto 0.7060, falling back to 0.7038 this morning.  This week is an important one for U.S data, Core PCE and Personal Spending are released this evening, Consumer Confidence tomorrow, ISM Manufacturing PMI and a rate decision on Wednesday.  Rates are expected to remain on hold, the FOMC Statement to reiterate a 'patient' outlook.  Payroll data released on Friday will be important for investors.  Much like Australia, employment remains elevated and supportive of home currency moves. 

EUR

With no EU data to report the Euro was at the mercy of USD moves.  As explained above it was a choppy weekend for USD price action.  AUD/EUR remains dormant at 0.6312, Eurodollar a little more exciting after breaking below key long-term support last week, but fighting back on a weaker interpretation of the latest installment of U.S GDP figures.  With a dovish ECB and the likelihood of further EU stimulus round the corner, the Euro is expected to remain soft, in particular against the USD.  This week sees the release of GDP and CPI numbers for a host of EU countries on Tuesday, PMI's are released on Thursday after Bank holiday's on Wednesday.  Flash CPI estimates are released on Friday.  

GBP

CBI Industrial Orders pritned at -5 (3 exp) on Friday sending the Pound lower against a stronger USD intially, the Pound was able to make up some ground towards the end of the U.S session.  AUD/GBP is trapped for now around 0.5440.  Brexit messiness continues, we have political parties gearing up for local and European elections, the results of which will be very interesting indeed.  May is clinging onto power, reports of Brexit negotiations quietened off last week, maybe we'll hear of more news throught the week. BOE Governor Carney speaks this evening, Consumer Confidence is also released.  Manufacturing PMIs ae released Wednesday, with a BOE rate decision and statement on Thursday.  Rates are expected to remain on hold.  Important Services PMI is released on Friday.  All in all a big data week for the U.K.  Can it get the Pound running? 

NZD

AUD/NZD opens lower at 1.0572 this morning, after eclipsing highs of 1.07 a week ago.  The RBNZ is likely to cut rates if data continues to deteriorate, can the RBA pip the RBNZ however and cut rates next Tuesday? A race to the bottom it seems.  Business Confidence released Monday and Employment data are first up however, the pick of the data this week.   

Today’s data

USD:

  • March PCE Core Deflator 

EUR:

  • April Industrial Confidence 

GBP:

BOW Governor Carney Speaks in London

FX Corp