Currency Update - Monday 6th May 2019

AUD

The AUD opens lower this morning at 0.6988 following a lacklustre USD performance over the weekend and threats from Trump to increase tariffs on China.  Risk currencies were effected, AUD touching lows of 0.6960, before recovering to open this weeks' trading session a shade below 0.70 cents. U.S Payroll data posted a big beat, capping a largely positive week for U.S economic data.  Commodities remain elevated, preventing the AUD from falling below key support, global stocks posted gains over the weekend, this was before Trump's trade deal comments however.  The AUD opens under pressure this week on the back of a potential rate cut from the RBA tomorrow at 2:30pm.  Futures markets are pricing in a 45% chance of a rate cut, which would likely see the AUD fall to test resistance around 0.69 U.S cents.  The AUD remains susceptible to further U.S/China tariff commentary this week also.  To the data and ANZ Job Ads are released this morning, we get the latest insallment of Retail Sales tomorrow, Construction and Trade Balance data, along with the RBA's monetary policy decision tomorrow.

USD

U.S Non-Farm Payroll data shot the lights out at 263k jobs added (190k exp), taking the unemployment rate to 3.6% (3.8% exp).  Average Hourly Earnings data was weaker however at 0.2% MoM and 3.2% YoY, both weaker by 0.1%.  The USD initially rallied, but couldn't hold onto gains.  Markit Services & Composite PMIs for April were a touch higher than expected, ISM Services data fell below expectations however.  Both Kudlow and Pence decided to reitterate Trump's recent comments about low inflation, suggesting the Fed needs to look at it's dual policy.  Commentary from actual Fed members reinforced the need for 'patience' and the need to act upon the incoming data only if required.  Trump's comments on the possibilities of raising tariffs on China before any deal is negotiated has spooked risk curencies this morning, The USD Index (DXY) remains under resistance at 97.53 this morning.  It's a rather quiet week for U.S data this week, data kicks off Wednesday with a speech from Chairman Powell, PPI, core PPI and Wholesale Inventories.  CPI and Core CPI results will be important for markets Friday evening. 

EUR

Eurodollar opens lower this morning at 1.12, AUD/EUR again remains trapped in a small range at 0.6246.  Flash EU inflation data released over the weekend surprised to the upside, CPI printing at 1.7 YoY (1.6% exp), Core CPI was also higher at 1.2% (1% exp).  The Euro failed to lift despite the better numbers.  European equities closed higher, the DAX the standout performer, up more than 0.5%.  The latest installment of Flash EU Services data are released this evening, can the EU build on last month's improvements? The ECB's Monetary Policy Meeting Minutes are released Wednesday this week and there's a steady release of EU data throughout the week.  The Euro is trapped in a tight range at present, Friday's U.S CPI and tomorrow's RBA rate decision the potential volatility catalysts this week.  

GBP

Sterling opens towards recent highs against the AUD this morning at 0.5309, more positive comments from British P.M Theresa May regarding a coming together of political parties helping the Pound.  Meanwhile Labour politician's said they won't back a Brexit deal without a people's vote, so the confusion continues.  U.K Services PMI for April came in at 50.4 (50.3) helping the Pound's bid tone also.  It's another holiday in the U.K today, data picks up with housing data tomorrow, with the all important GDP and Manufacturing Production released Friday.  Construction Output, Industrial Production and the Goods Trade Balance are released at the same time.  

NZD

The Kiwi opens at recent lows against the AUD and USD this morning.  NZD/USD touch lows of 0.66, before pulling itself off the mat this morning a touch.  Inflation Expectations are released tomorrow, we have a milk auction on Wednesday as well as a very important RBNZ rate decision.  The odds are weighed in favour of an RBNZ rate cut this week, which should keep the NZD contained.  


Today’s data

AUD:

  • March Job Ads

USD:

  • Fedspeak

EUR:

  • March Retail Sales

CNY:

April Caixin Services PMI 

FX Corp