Currency Update - Wednesday 17th July 2019
AUD
The AUD came under selling pressure after reaching a high of 0.7041 yesterday, opening 0.5% lower this morning at 0.7012. The RBA's Monetary Policy Meeting Minutes were released to little fanfare, the USD powered ahead overnight, stocks and commodities were offered. It should be a quiet day today with the release of second-tier data in the form of leading indicators. The AUD still looks to break through the 0.7050 handle, which has contained the local unit of late. Strong resistance and a resilient USD hamstringing the battler. A U.S Fed rate cut later this month could get things moving for the AUD however, with most market pundits expecting the Fed to cut by a minimum of 25 basis points. Employment numbers and NAB's Quarterly Business Confidence numbers are released tomorrow. For now risk sentiment has been dampened by continued concerns over the trade war between the U.S and China. Resistance remains at 0.7050 & 0.7100, support can be found at 0.6980.
USD
U.S data was mixed overnight, June's Retail Sales numbers rose by 0.4% (0.2%), whilst Industrial Production was flat (0.1% exp). Trump was on the wire spruiking a Fed rate cut and how that would be great for stock markets, he also mentioned that tariffs were having a positive impact on the U.S. The Fed's Powell again expressed the central banks desire to act as appropriate amid increasing uncertainties and muted inflation pressures. Nothing new there! Evans the perma-dove called for 50 basis points of cuts. The USD performed well across the board, especially against Sterling, which finds itself much lower this morning. Wall Street closed with roughly 0.5% losses as investors remain cautious. Tonight's Housing Starts and Building Permits data shouldn't be the catalyst for currency movement, more Fed commentary later this week is more important for shaping investors decisions and hence currency movements.
EUR
AUD/EUR remains stable despite a terrible German ZEW Survey for July released overnight (-1.1 v's 5.0 exp). Expectations printed at a 9 month low, the headline figure the worst in close to ten years. The ECB's Villeroy meanwhile re-affirmed the central banks commitment to act if and when needed. He also called for Fiscal reforms. Eurodollar fell as the USD was better bid overnight. Local data is second-tier in nature today so expect a quiet range for AUD/EUR. Final EU June CPI numbers are released this evening, an important number for central bank watchers.
GBP
Chances of a no-deal Brexit increase as both Hunt and Johnson declared the Irish backstop deal is dead. Despite Unemployment in the U.K remaining close to record lows at 3.8% and a surprise increase in weekly wages growth (3.4% v's 3.1%) the Pound tumbles against its currency crosses. AUD opens higher at 0.5649. June's CPI is released this evening.
NZD
The Kiwi didn't avoid the USD's strength overnight, falling 40 pips from yesterday's high. Fonterra's latest dairy auction saw princes rise around 3%, the Kiwi largely unaffected during trading hours. Traders seem to be preparing for the Fed's rate decision later in the month, small ranges for now. This could all change quickly if the Fed takes action.
Today’s data
USD:
Housing Starts/Building Permits, Beige Book
EUR:
June Final CPI
GBP:
June CPI