Currency Update - Monday 1st July 2019
AUD
The AUD caught a risk bid over the weekend as President Trump confirmed that trade talks with China are 'back on track'. Equities enjoyed the news, as both sides agreed to calm escalations and look for a resolution to the recent trade disputes. New tariffs threatened by President Trump are now on hold, bringing a sense of calm to markets. The AUD opens on a positive note today, reaching two month highs after China data released over the weekend printed very close to expectations and with the good news from the G20 summit. The RBA are in action tomorrow, the big four banks here in Australia all forecasting a further 25 basis point rate cut. With Governor Lowe previously suggesting rates need to fall further, it looks very likely rates will be slashed to 1%, which could well stall any further gains for the local unit. Chinese Caixin Manufacturing PMI is released later today, Governor Lowe then speaks on Tuesday, Building Approvals and Trade Balance data are also released. In what is a big data week this week, Retail Sales and Construction data are released towards the end of the week. Resistance is at 0.7050 & 0.71, support can be found at 0.6950.
USD
Data in the U.S was mixed over the weekend, Personal Income was 0.2% higher than expected, Personal Spending fell 0.1%. Core CPE, the Fed's favourite gauge of inflation printed as expected at 0.2% for the month, the yearly figure at 1.6% (1.5% exp). Chicago PMI for June fell to 49.7 from 54.2, whilst the Uni of Michigan Sentiment survey printed marginally higher than expected. The USD was offered across the board, the Pound Euro and Antipodeans all higher at the open as U.S/China trade talks are back on after warming relations between Trump and Xi. With negotiations now back on, equity futures closed higher and risk appetite should continue throughout the week. Trump also visited North Korean leader Kim, crossing the border into North Korea, becoming the first U.S President to do so. U.S Manufacturing PMI's are released along with Construction data this evening, Trade Balance and Services PMI are released Wednesday. Friday's Non-Farm Employment figures and Unemployment data will be the pick of the data calendar this week.
EUR
AUD/EUR opens higher this morning at 0.6182, close to a one month high. French CPI for June printed ahead of expectations over the weekend at 0.2% (0.0% exp). Spanish GDP printed as expected at 0.7%. EZ inflation for June printed 0.1% ahead of expectations at 1.1%. Eurodollar rallied as the USD was sidelined after more positive U.S/China trade talk, Trump agreeing not to impose further tariffs on China and return to the negotiating table. European equities closed higher, with rallied between 0.3% and 1%. Manufacturing & Services PMI's are released throughout the week, along with a host of other European data.
GBP
There wasn't a great deal of interest in the Pound over the weekend, the focus being on the G20 summit and the Trump/Xi sideline meetings on trade. Sterling rallied against the big dollar, up at 1.27 this morning. AUD/GBP remains in a tight range, up at 0.5532. U.K data is released throughout the week, Services and Manufacturing PMI's, as well as central bank chatter the highlights. Meanwhile the Brexit clock ticks down and Hunt and Boris battle it out for the Conservative leadership.
NZD
The Kiwi opens at 2 month highs against a weaker USD this morning, risk assets rallied stalling the USD's advance. Business Confidence numbers are released tomorrow, the Kiwi will react to wider moves in global risk sentiment and USD appeal.
Today’s data
USD:
· June ISM Manufacturing, May Construction Spending
EUR:
· June Manufacturing PMI, German & EU Unemployment
CNY:
· Caixin PMI June