Currency Update - Thursday 9th May 2019
AUD
The AUD fell back below 0.70 U.S cents overnight as risk aversion again effected the local unit, this and a marginally stronger USD, commodities also had an offered tone. Concerns over whether China are ready to do a deal with the U.S weighed on risk assets, problems over China's heavily subsidised industries a sticking point for the Chinese and inturn risk assets. For now, the AUD remains under pressure as sources release news that China is backtracking on legal issues that had been previously been negotiated. With no local data to report yesterday, the focus was on the RBNZ, who cut interest rates by 25 basis points to match that of Australia, now at 1.5%. The AUD initially spiked to 1.07, but was unable to hold onto these gains. The AUD is trapped in a tight range for now, 0.7060 providing resistance, 0.6960 support.
USD
President Trump widened sanctions on Iran overnight to now include iron, copper and steel, as well as a total oil embargo. U.S/China trade negotiation headlines dominate risk sentiment currently, equities subdued with mixed messages about China's intention to sign off on the biggest trade deal in history. News China is prepared to backtrack on previously negotiatied terms is weighing on risk assets. There's plenty going on behind the scenes and with Trump ratchting up tariffs China looks to be backed into a corner. Will she come out swinging? That's the question every investor and trader would like to know the answer to. We'll get more over the coming days, it goes without saying that confirmation either way will be huge for markets! Trump still believes the Chinese are coming to America to make a deal. Meanwhile the Chinese Commerce Ministry said China would need to make necessary retaliatory measures if the tarifff hikes go ahead this week. Equities closed in the red or flat. No U.S data this evening.
EUR
German Industrial Production for April reached 0.5% (-0.5% exp) in another beat for EU data, the Euro hardly reacted however. AUD/EUR opens with marginal gains against the single currency, which is still trapped in a tight range. In Italy, deputy P.M Salvini said the government will cut taxes in 2019, despite this breaking EU rules, the Euro briefly dipped, then recovered. Meanwhile ECB PResient Draghi announced that the ECB will not be adjusting the central banks inflation target, as it would damage the central banks credibility. Surely it's a little too late for that? Equities were a mixed bag, the DAX the standout, up 0.7%. It's a quiet evening for data which picks up again tomorrow evening.
GBP
GBP/USD opens much unchanged at 1.30. AUD/GBP eked out a small of 0.2%. As expected, reports surfaced that the Tories and Labour are miles apart on any agreed negotiated Brexit deal and the U.K heads to the European elections. This will be an showing at the ballot box that's for sure. Meanwhile the Brexit clock keeps ticking and Theresa May comes under more political pressure to resign. May has refused to put a timeline on her departure from the top job. No data of interest released this evening.
NZD
The RBNZ cut interest rates yesterday, depsite the majority of market particpants believing they would hold off. The Kiwi initially fell to 0.6532 before recovering to 0.6585 this morning. The Kiwi looks heavy and is quite frankly a shot duck if the USD finds it's mojo again over the coming weeks. RBNZ Governor Orr said that it's too early to tell if another adjustment to monetary settings is required. A rate cut he said was needed to get the economy moving again. Did the RBA miss their chance?
Today’s data
USD:
Weekly Jobless Claims
CNY:
April CPI & PPI