Currency Update - Tuesday 7th May 2019
AUD
The AUD traded in a tight range yesterday, touching fresh lows of 0.6961, recovering late in the afternoon session. The AUD couldn't hold onto 0.70, falling to yesterday's opening levels this morning. Chinese data was marginally better than forecast, Caixin Services PMI printing at 54.5 (54.3 exp). The monthly inflation guage fell by less than previous, Job Ads were down -0.1%. It was a wild night for equities with global bourses tanking before posting small losses at the close, applying pressure to the risk effected local unit. Trump continues to intervene, much to the chargrin of traders, markets await the next twitter tirade or verbal outburst re the China/U.S trade negotiations. Markets will remain nervous until any trade deal is signed. The Chinese announced that a delegation will travel to America as planned, calming investor nerves a little by the close of the session. Today's all about the RBA, with the chance of a rate cut priced in at 50%. WIll the RBA go early and slash rates by 0.25% today? We'll know at 2:30pm. Naturally the first live RBA meeting in 3 years is a potential risk event for the AUD. Retail Sales and Trade Balance are released beforehand at 11:30am. Support is now found at 0.7950, resiatance at 0.7050.
USD
U.S/China trade negotiations seem to be back on track after Trump's outburst about tariffs yesterday, markets patiently awating the confirmation of a trade deal between the two nations. Markets are sure to rocket should an agreement be made and news that a Chinese delgation would still visit America had equity traders more confident towards the end of the U.S session, the S&P and DOW limiting losses to between 0.2-0.5%. Oil liked the news, rallying over 1%, commodities traded off their lows helping the AUD open closer to 0.70 this morning. With no U.S data to report it really was a quietish session for currencies. The Feds Harker was on the wires, saying that he believed low inflation was transitory & that there was room for one more rate hike this year. JOLTS Job Openings data is released later this evening.
EUR
European PMIs were released overnight, Spain and Italy missed expectations by quite some distance, France printed on forecast, Germany saw an uptick, taking the EZ measure to 52.8 (52.5 exp). All in all a good result considering Services PMIs collapsed across the baord a few months' ago. Eurodollar remained within it's big old range, AUD/EUR... again, no significant exchange rate movement. This could change today with the release of Retail Sales, Trade Balance and and RBA rate decision at 2:30pm. It's a line ball decision, the AUD is likely to be volatile in the aftermath considering only 50% of any movement is priced in. German Factory Orders and second-tier EU economic data is due for release this evening.
GBP
A compromise agreement between British P.M May and Labour leader Corbyn is still in the wind. It may well be floating around for quite some time yet as news May is 'scenario planning' for a second referendum on account of the fact parliament may force the governments hand. According to sources parliament would have to approve a new people's referendum. The pound hasn't reacted too much to the headlines, AUD/GBP opening at yesterday's high of 0.5335 this morning. It was a public hoilday in the U.K yesterday, news being on the thin side the GBP traded ina tight range. Today's RBA rate decision will be important for all AUD crosses, including the Pound. Consumer Spending results at 11:30am also important for direction.
NZD
NZD/USD opens at 0.6602 this morning, towards the bottom end of the recent range. The USD was marginally stronger overnight, forcing the NZD to give up yesterday's half a percentage point gains. AUD/NZD seems comfortable for now around 1.0577. Kiwi inflation expectations are released later this morning, otherwise all eyes are on the RBA today, with the RBNZ to announce it's own monetary policy decision tomorrow.
Today’s data
AUD:
March & Q1 Retail Sales, RBA Cash Rate Decision
USD:
March JOLTS Job Openings
EUR:
German Factory Orders
GBP:
April House Prices