Currency Update - Thursday 2nd May 2019
AUD
The AUD reached 0.7060 overnight before falling to lows of 0.7010 after a less pessimistic Federal Reserve kept interest rates on hold. Markets were looking for an even more dovish tilt from the U.S central bank, they were disappointed however as interest rates were kept on hold and a more neutral statement was released. 0.70 resistance held up well, important U.S employment data on Friday could knock the AUD off it's perch however, if job creation and average earnings pick up. It was a quiet day's trading for the AUD yesterday, with most countries out for public holidays. AUD remains susceptible to downside risks, especially with th RBA's interest rate decision around the corner. Markets are still pricing in a 40% chance of a rate cut. Resiatance now stands at 0.7060, support at 0.6980. New Home Sales data is released later this morning, giving the RBA further data to consider.
USD
U.S stocks gave up ground overnight as markets were less inclined to believe the Federal Reserve will cut rates soon, the S&P closing 0.9% lower. Fed Chair Powell suggested that weakness in inflation was transitory sending the DXY 0.6% higher and back up to old resistance around 97.70. April's ADP Employment printed an impressive 275k jobs jobs added, comfortably beating expectations of 180k and potentially setting the scene for a healthy ADP employment report on Friday. Markit Manufacturing PMI was also higher at 52.6 (52.4 exp). ISM Manufacturing lagged expectations. The Fed acknowledged the risks to inflation, consumer spending and business investment, the word 'patience' being used several times. So it's down to the data folks, this evening we get weekly jobless claims, Durable Goods and Factory Orders.
EUR
Most of Europe was closed for May day holidays yesterday, leaving data thin on the ground. Eurodollar was weaker at 1.12, USD strength the theme of the evening after a more neutral Federal Reserve wasn't as dovish as markerts were expecting. AUD/EUR opens at a weekly low this morning at 0.6263. Manufacturing PMIs and German Retail Sales are released this evening.
GBP
U.K Manufacturin PMI pritned as expected at 53.1, down on March's 55.1. The Pound strengthened on account of the British P.Ms posturing about the necessity to get her deal over the line. The FTSE closed 0.5% lower. The BOE inflation report is released this evening. Brexit headlines to dictate direction as per usual, according to sources Ministers are bitterly divided about labour's plan for the U.K to remain part of a customs union. Insiders say a deal is still looking very unlikely, hard-Brexit? The BOE releases it's inflation report this evening. GBP for now is on the front foot, how long will it last?
NZD
March Building Permits collapsed to -6.9 in March, the Kiwi opens at 0.6626 against the USD and and 1.0588 against rhe AUD. It should be a quiet day again today with Japan out for holidays.
Today’s data
USD:
Weekly Jobless Claims, Durable Goods, Factory Orders
EUR:
FR, DE, U.K, EU April Manufacturing PMI
GBP:
BOE inflation Report
CNY:
Caixin Manufacturing PMI