Currency Update - Tuesday 2nd July 2019
AUD
The AUD fell from a high of 0.7025 yesterday, opening lower at 0.6965 this morning after flirting with support at 0.6950 overnight. Investors bought risk assets, stocks rallying, fresh highs for U.S bourses overnight. Investors are concerned that the RBA will indeed cut rates by a further 0.25% at its monetary policy meeting later today, futures markets pricing the chance of a cut at around 75%. Yesterday's Caixin Manufacturing Index data contracted to 49.4, the local AIG Manufacturing Index also under pressure at 49.4 (52.7 exp). News that protestors in Hong Kong had entered the central government office saw risk dive, as tensions mount between HK and China. The G20 inspired risk rally continues though it would seem, despite stocks falling 1% from the overnight highs. Markets will again look for any developments between the U.S/China trade talks and of course today's central bank action. Resistance is now at 0.70/0.7020, support at 0.6950 & 0.69.
USD
U.S data was again mixed overnight, Markit Manufacturing printing higher, ISM Manufacturing falling down from 52.1 to print at 51.7. The price of oil rallied with other risk assets, up 2% in early trade, settling with 1% gains at the close. The USD was higher across the board, but most notably against the Antipodeans, the Kiwi falling below 0.67 U.S cents. Wall Street closed higher as investors hope the prospects of weaker interest rates and a detente between the two superpowers will see stocks gain further, the S&P up 0.8% at the close, Nasdaq up 1%. Data is on the thin side this evening, the Fed's Williams makes a speech on Global Economic & Policy Outlook this evening.
EUR
European stocks flew out the gates overnight, up 2% in early trade but trimming gains after a series of weak PMI's soured the mood. Spanish Manufacturing PMI fell into contraction from 50.1 to 47.9, Italy slowed to 48.4, German & French also lower taking the EU measure to 48.5. The EU are still bickering as to who takes the top jobs, no doubt a few ego's in the mix there. It didn't help the Euro's cause, which has fallen 1% from the highs the previous day. Second tier economic data is released from the EU this evening, meanwhile the AUD holds onto most of the recent gains against the single currency today. This could all change if the RBA cut rates at 2:30pm today.
GBP
AUD/GBP trimmed some ground overnight as investors gear up for another RBA cut today, taking interest rates to 1%. The Pound was weaker against a stronger greenback, allowing rom for the AUD's appreciation. U.K Manufacturing PMI fell to the lowest level since 2013, companies cutting back on spending. Construction PMI is released this evening.
NZD
The Kiwi fell against a stronger greenback overnight, the flightless bird made small gains against the AUD however. The highlight this week will be U.S NFP's on Friday, it is a rather lackluster week for Kiwi data, so as usual the NZD will be at the mercy of wider market movements and risk appetite.
Today’s data
AUD:
RBA Policy Decision
USD:
Fed speak
GBP:
Construction PMI