Currency Update - Monday 22nd July 2019

AUD

It was a quiet end to the week for currencies, the AUD opening 0.5% lower than Friday's highs at 0.7082.  USD strength was the theme as markets trimmed expectations of a 50 point Fed rate cut, to a more realistic 25 points.  Markets had got ahead of themselves as U.S economic data recovered the past week, employment numbers the big beat which forced traders to re-asses their expectations.  Gold was onto a flyer, up to multi-year highs trading above $1,450, the first time since 2013.  This week sees speeches from RBA members, with PMI's released tomorrow.  It's a quiet week for global data, the AUD's moves for the most part will be dictated by USD flows and any escalation in trade wars and geo-political concerns.  The ASX remains elevated, commodities broadly supportive of the AUD's recent moves.  Support is now found at 0.70, resistance at 0.7050 & 0.71. 

USD

The Fed's Bullard said that a 25 basis point cut would be appropriate at the Fed's up and coming rate decision meeting.  Markets believed him trimming expectations of a 50 point cut, which had been factored in as a 70% chance last week.  The USD liked the revision to expectations, rallying against its counterparts and knocking the AUD off its recent three month highs.  Oil rallied as tensions mount with Iran, the U.S reportedly knocking out an Iranian drone over the weekend.  Trump was at it again criticising the Fed, meanwhile Democrat leader Pelosi said her party will not accept the latest debt ceiling offer from the White House.  To the data and the Uni of Michigan Sentiment Survey for July printed at 98.4, up from 98.2, but below expectations of 98.8.  The data didn't have much impact as the USD was already weaker against the majors.  U.S data is steadily released throughout the week, PMI's and Advance GDP numbers the highlights. 

EUR

AUD/EUR hardly moved the needle over the weekend, opening close to recent highs at 0.6278.  Eurodollar softened as the main theme was USD strength over the weekend.  It's global PMI week, we get the latest installment from Europe over the coming days.  With no data to report over the weekend the Euro kept within its recent ranges, but remains susceptible to changes in monetary policy, ECB members outlining that they are happy to pull the trigger on looser monetary accommodation.  This will continue to weigh heavy on the single currency.    

GBP

U.K Public Sector Borrowing for June came in twice that of expectations, keeping the Pound offered on exchanges.  AUD opens close to last weeks' highs at 0.5632 as the fear of a hard-Brexit remain palpable.  Merkel however said that if more time is needed on Brexit the EU will agree.  Still, the news didn't move the needle on the Pound much, opening lower against the USD, but above key support. It's a quiet week for data, with CBI Industrial Order Expectations the only data point of note, released tomorrow. 

NZD

The Kiwi lost some ground to the USD, falling to 0.6760, but made up lost ground against the AUD.  Last week the Kiwi traded in a tight range, this week could well be the same as local Kiwi data just sees the release of Trade Balance tomorrow.  It's a quiet week for global data, U.S PMI's and Advance GDP on Friday the pick of the bunch. 

Today’s data

USD:

June Chicago Fed Activity