Currency Update - Thursday 20th June 2019

AUD

AUD/USD opens marginally higher this morning after the Federal Reserve kept interest rates on hold overnight, but waxed dovish on the outlook, a July rate cut now fully priced in by markets.  The USD was weaker across the board, AUD briefly trading above 0.69 for a short period, before settling above yesterday's opening level.  The AUD moved in a tight range yesterday, supported by commodities which found a firm footing in trade.  RBA Governor Low is speaking today where he may just clarify the banks monetary policy intentions. Oil price rallied a further 1% overnight, gold also higher despite the bid tone in equities.  Support is now found at 0.6870, resiatance at 0.69 & 0.6950. 

USD

The USD lost ground to it's counterparty currenies overnight as the Federal Reserve waxed dovish on monetary policy, the statement removing the word 'patient', instead favouring tthe Fed to act as appropriate in terms of assessing data, whilst saying that uncertainties have increased.  Inflation and Unemployment forecasts were lowered, the dot plot was a more balanced scorecard however, with just one Fed member calling for an immediate cut.  Bond yields fell sharply sending the USD lower and equities close to 0.5% higher.  In his Q&A session Powell admitted that the next monetary adjustment could be as much as a 50 point move, again that would depend on the incoming data.  Eurodollar rallied around half a percent on the news, the Pound was also higher against the USD.  Tonight is a big evening for data also, with the release of Weekly Jobless Claims, June Philly Fed and May's Leading Index.  

EUR

A report surfaced that the ECB is due to start studying the technicalities of launching a new QE programme, this softened the Euro after rallying to 1.1254 against the USD.  Nonetheless the Euro closed higher, so too equity futures after the Fed indicated they will start cutting interest rates, a result of weak inflation and slowing growth.  European data was all weaker than expected overnight, German PPI at -0.1% (0.3% exp), EU Current Account also lower, Italian Trade Balance well short of expectations.  June Consumer Confidence is released this evening. 

GBP

Boris Johnson tightened his grip on the Tory leadership battle overnight, receiving half of his colleagues votes, the race now down to three.  Yearly CPI printed as expected at 2%, Core CPI 0.1%, higher than expected, RPI also 0.1% higher at 3%.  CB industrial Orders sank by -15 (-11 exp).  The Pound was able to rally on account of USD weakness opening at 0.5440 against the AUD.  Retail Sales and a BOE rate decision are released this evening.  Rates are expected to remain on hold, although the central bank has been waxing more hawkish of late.  The four month run into Brexit should contain the BOE however. 

NZD

NZD/USD at 0.6535 keeps the pressure firmly on the NZD, which hit a recent low of 0.6480.  GDP q/q printed as expected at 0.6% this morning.  The Kiwi will react to this weekend's G20 meetings and by extension the trade war battle.  Chinese President Xi has agreed to meet with Donald Trump, it is unlikely a deal will be done, but maybe more time can be bought and the USD can take it's foot of the Kiwi's throat.  Much like the AUD, the Kiwi remains susceptible to further losses against the USD. 



Today’s data

AUD:

  • Rba Governor Lowe Speaks

USD:

  • Weekly Jobless Claims, June Philly Fed, Leading Index

EUR:

  • June Consumer Confidence

GBP:

  • Retail Sales, BOE Monetary Policy Decision

NZD:

Q1 GDP

FX Corp