Currency Update - Wednesday 26th June 2019
AUD
The AUD opens in familiar territory at 0.6955 this morning, the USD marginally stronger overnight as Fed Officials discounted the chances of a large 50 point interest rate cut in July. Gold continues to fly, up over 10% for the month of June. Commodities remain supportive of the local unit and Tuesday's RBA rate decision will again be the main focus for the AUD this coming Tuesday. The ASX opens at 6639 as stocks were generally offered in global markets overnight. The Trump/Xi meeting at the G20 this weekend will also dictate risk appetite and the direction of risk assets. A U.S administration official spoke of the unlikeliness of a deal being done overnight. Support is found at 0.6920, resistance at 0.6960 & 0.7000.
USD
U.S data was mixed overnight, with the Richmond Fed Manufacturing Index for June falling to 3 (2 exp), New Home Sales printed -7.8% (1.6% exp), Consumer Confidence was also worse than expectations at 121.5 (131 exp). Fed speakers played down the probability markets have applied for a 50 point basis cut, Powell and Bullard suggesting this is a step too far. The USD rallied on the back of these comments. Wall Street closed lower as we head closer to the G20 and as investors take profit from recent gains. This weekend's G20 is critical for the next step higher in stocks or not as the case may be, all depends on the sentiment and action following the Trump/Xi meeting. The majors closed lower against the big dollar, AUD trading in a tight 30 point range. Durable Goods Order and Wholesale Inventories are released this evening.
EUR
Eurodollar fell from its 1.14 perch overnight, opening at 1.1363 as the USD was bid across the board. Stocks suffered as concerns linger over U.S/Iranian tensions and this weekend’s G20 summit. With no European data to report, currency markets had a relatively quiet session, AUD/EUR opening a smidge higher, remaining close to the recent lows. German Consumer Confidence is released this evening.
GBP
With no data released from the U.K overnight the Pound reacted negatively to a stronger USD, falling 100 points from yesterday's highs. AUD/GBP took advantage of Sterling weakness, climbing to 0.5482 this morning. The FTSE closed marginally in the black, bucking the trend of weaker global stocks. Boris Johnson announced that May's Brexit deal was 'basically dead' and that he only wants to keep some parts, not others. Chances of a hard Brexit or general election are increasing. There is no U.K data of note released this evening.
NZD
The AUD opens marginally weaker against the NZD this morning at 1.0490, USD/NZD at 0.6629. The RBNZ are in action today, rates are expected to remain on hold, we could see the return to a specific easing bias however, which could send the NZD back down to recent lows against the USD.
Today’s data
USD:
Durable Goods, Wholesale Inventories
EUR:
German Consumer Confidence
NZD:
Cash Rate Decision - RBNZ