Currency Update - Tuesday 21st May 2019
AUD
It's been a quiet 24 hours for AUD volatility. The AUD reached a high of 0.6943 post election only to find support again a shade above 0.69 U.S cents. With no local data to report yesterday markets turned their focus to trade war concerns again overnight. Global stocks fell amid heightened national security concerns against telecommunications companies including Huawei. U.S stocks fell, meanwhile the ASX powered ahead yesterday on account that Labour's franking credit policy will not see the light of day, at least for another three years anyway. Today's RBA meeting minutes from May could provide more colour in the interest rate debate. The minutes are released at 11:30am, with Governor Lowe making a speech on 'The Economic Outlook and Monetary Policy', where he is more likely to allude to the RBA's present line of thinking. Will the RBA need to see more negative employment numbers to act? We'll know around midday, heightened volatility around this time to be expected. Support is at 0.6870, resistance at 0.7020.
USD
With just second-tier data released from the U.S overnight the USD traded in a tight range. Commodities were marginally softer, adding to the AUD's offered tone, U.S stocks closed with losses of between 0.5% and 1%. It is clear the U.S isn't going to back down on Huawei and other Chinese companies that compromised U.S intellectual property/technological transfer. Markets wait for an official response from China. Meanwhile, Iran announced that they will be increasing their rate of uranium enrichment adding to the risk off tone. Tensions are high in the Middle East, markets reflecting this in the pricing of gold and the JPY. News from the Fed, Bullard said that he would push for a rate cut if core inflation remains persistently low. It's another quiet evening for U.S data with the release of Existing Home Sales only.
EUR
AUD remains under 0.62 Euro cents as the prospects of a specific easing bias from the RBA heightens. We'll know more around midday today. Nothing much from Europe overnight, Italian Deputy PM Salvini raging against EU budget rules once more. Eurodollar remains soft as the USD Index (DXY) closes in on 98.00. European equities tanked between 2.5% and 0.5%. EU Consumer Confidence is released this evening.
GBP
AUD/GBP remains in a tight range, opening at 0.5429 this morning. With no new Brexit news the Pound found support at 1.2725 against the USD, whilst falling to a low of 0.5442 against the AUD. Inflation Report Hearings and CBI Industrial Order Expectations are released this evening. U.K economic data was much improved for Q1, investors look for a continuation of positive economic news.
NZD
NZD/USD is towards the bottom of its range at 0.6530, after falling to a low of 0.6510 over the weekend. AUD/NZD is contained at 1.0568, unable to break either way. NZD to react to movements in the USD and wider geopolitical developments in the absence of local stimulus.
Today’s data
AUD:
RBA minutes of May Meeting, Governor Lowe Speaks
USD:
April Existing Home Sales
EUR:
Consumer Confidence