Currency Update - Monday 17th June 2019
AUD
The AUD came under selling pressure over the weekend, mainly on account of USD strength and concerns over escalations in the Middle East. AUD/USD opens at 0.6873, after breaking support at 0.69 U.S cents Friday evening. Speculation of a further RBA rate cut in July continues to weigh on AUD bids, couple this with a return to positive U.S data over the weekend and you can see why the AUD is struggling this morning. Global growth figures are weighing on sentiment, despite equities being well bid. The ASX continues its stellar run opening at 6562 this morning. Chinese data missed target over the weekend, Industrial Production falling 0.4%, Fixed Asset data 0.5% lower, Retail Sales did pick up by 0.5% however. Tomorrow's RBA Monetary Policy Meeting Minutes should shed further light on the RBA's forward guidance, Wednesday sees the release of Leading Indicators and Governor Low is speaking on Thursday. Manufacturing and Services PMIs are released on Friday. The big event for this week is the U.S Federal Reserve meeting on Thursday. There is a small chance rates will be cut, more likely however the FED will prepare markets for a more dovish monetary outlook. It's the G20 meetings this weekend, this and a stronger USD likely to keep the AUD under pressure. 0.6840 is key support, if this goes 0.6715 is in view. Resistance at 0.69 & 0.6950.
USD
The USD opens higher across the board this morning at 97.52 on the DXY. The Pound, Euro and Antiopdeans all open lower this morning as the USD finds it's mojo. U.S data dragged itself off the mat as Retail Sales for May Rose 0.5% (0.6% exp), more importantly however the previous month was revised up to 0.3% from -0.2%, core measures also revised higher. Industrial Production for May printed 0.4% to beat estimates of 0.2%, Capacity Utilisation also higher. The University of Michigan for June printed 0.1% behind expectations. Meanwhile Trump seemed to soften his stance on President Xi by saying it doesn't really matter if they do not meet at the G20, as a deal is likely to be done at some point. Markets weren't buying it, especially considering Xi was meeting with Putin & Erdogan. The prospects of a U.S/China deal being done this weekend looks slim, will Trump follow through with tariffs on a further $300bn of Chinese imports? If so, stock prices will come under pressure and so too the local unit. Wall Street closed marginally lower over the weekend, but are likely to find a bid if Powell waxes dovish at Thursday's Federal Reserve Meeting. The Dot plot charts will be interesting this time round considering Powell has changed language definitions around QE instruments and the new 'normal'. Flash Manufacturing and Services PMI's are released on Friday.
EUR
Eurodollar fell to 1.12 on account of USD strength, AUD opens under pressure at 0.6127. Without much data to report for the Euro it was susceptible to renewed USD appeal, the AUD/EUR levitates after big losses last week. Higher unemployment weighted on the AUD, most analysts and banks are forecasting another RBA rate cut next month. It's a huge week for European data, ECB President Draghi speaks four times this week, EU CPI is released tomorrow, along with Trade Balance data, German PPI, EU Current Account and Italian Trade Balance tomorrow and Flash Services and Manufacturing PMI's on Friday.
GBP
AUD/GBP traded sideways over the weekend, U.K data took a break, the focus was on the Tory leadership battle, Boris Johnson refusing to join a TV debate between the Conservative hopefuls. The Pound was scalped against the big dollar as the USD came roaring back above 97.00 in Index terms. This weeks sees Governor Carney speak Tuesday evening and important CPI/RPI, PPI data is released on Wednesday. Retail Sales on Thursday along with a BOE Monetary Policy decision will be the key events this week. MPC members are becoming more hawkish with talk of conditions being met for a rate hike. Whilst it is unlikely this will happen this week, the U.K central bank are the only central bank making tightening noises. Brexit is likely to quell any rate action for now however.
NZD
The Kiwi was polaxed by the USD over the weekend, opening at 0.6495 this morning, 1% higher than the October 2018 lows. Westpac's Consumer Sentiment is released tomorrow, Current Account and a Milk Auction on Wednesday. GDP data released Thursday is the pick of the bunch and important for Kiwi direction. Trade War talks and G20 this weekend will also be important for Kiwi value.
Today’s data
USD:
June Empire Manufacturing
GBP:
June House Prices