Currency Update - Monday 3rd June 2019

AUD

The AUD opens at a familiar 0.6931 this morning, after briefly testing resistance at 0.6940 over the weekend, the USD was weaker across the board.  President Trump announced plans to place tariffs on Mexico, sending stocks sharply lower, ASX futures at 6340 this morning (-0.75%).  The AUD traded in a tight range last week, despite softer economic data.  This week is vital for AUD direction on account of the RBA's interest rate decision tomorrow at 2:30pm and GDP q/q on Wednesday.  China are releasing their own PMI data both today and later in the week, we also have local Home Loans data on Friday.  The U.S /China trade war is becoming intractable, as China released a white paper over the weekend calling out the U.S as the ones responsible for the stalled trade talks, whilst blacklisting a number of U.S companies.  Negative risk sentiment and an expected rate cut tomorrow should keep pressure on the local unit.  It's a huge week for the AUD, resistance is at 0.6940 & 0.6975, support comes in at 0.6860.    

USD

Global trade tensions saw U.S stocks sold off, the S&P falling close to 1.5%.  The USD was generally weaker, the DXY falling to 97.61 after last weeks' stint around 98.00.  U.S data printed better than expected, Personal Income & Spending, and Chicago PMI printed ahead of expectations, Core PCE matched expectations at 0.2% m/m and 1.6% y/y.  There is a growing expectation that the U.S fed will have to step in later in the year to combat weak inflation.  U.S bond were again bid, extending gains for U.S yields, an indication that traders believe all is not well with the future performance of the U.S economy and that intereat rates will have to fall.  Stocks and risk assets began to fall last week, the S&P down 5% in May and closing below important technical support.  Oil price closed down over 5% in what was a huge move, commodities generally weaker, gold bucking the trend climbing 1.3%.  ISM Manufacturing PMI is released today, Fed Chair Powell speaks tomorrow evening, Non-Farm Payrolls released on Friday will be the highlight of the data week, as per usual. 

EUR

Eurodollar took advantage of USD weakness, opening at 1.1170, the Pound fell however, capping what has been a very negative month for Sterling, falling close to 5% against the USD.   European equities reacted negatively to Trump's announcement to impose tariffs on Mexico.  To the data and German Inflation for May printed below expectations of 0.3% (0.2% act), in a continuation of weak inflation data for EU countries.  EU Flash PMIs are released this evening, Flash estimates of CPI are released tomorrow, Services PMIs on Wednesday and a ECB Monetary Policy Decision on Thursday, where the central bank could announce more stimulatory measures to support a fledgling economy. Friday is another heavy data day for the Euro.  

GBP

With a lack of U.K data to trade off over the weekend, Brexit concerns and the tory leadership debacle saw the Pound trade lower, especially against it's USD counterpart.  AUD/GBP held onto last weeks gains up at 0.5484 this morning, Manufacturing & Construction PMIs are released early in the week, Services PMI Wednesday, as well as a speech by BOE Governor Carney on Thursday.  Meanwhile, chances of a hard Brexit seem to be increasing, a 20-30% chance according to sources.  The Pound is on the back foot at present, weakness set to continue most likely.   

NZD

It's a holiday in New Zealand today and it's a quiet week for data, with dairy auction results on Wednesday.  The Kiwi is holding on to 0.65 U.S cents, in at 0.6537 this morning.  The Kiwi will take it's cues from the USD and global risk sentiment, which has soured of late on account of trade war concerns.  

Today’s data

AUD:

  • May Job Ads

USD:

  • ISM Manufacturing

EUR:

  • May Manufacturing PMI

GBP:

  • May Manufacturing PMI 

CNY:

May Caixin Manufacturing PMI 

FX Corp