Currency Update - Wednesday 24th July 2019
AUD
The AUD opens lower this morning on account of USD strength, with no local data to report the AUD took its cues from the U.S overnight, the DXY up 0.4% this morning at 97.70. Commodities were a mixed bag, oil making further gains of 1.5%. Positive risk sentiment wasn't enough to keep the AUD's head above water, 0.70 briefly breaking before AUD settled marginally above. Manufacturing & Services Flash PMI's are released later today, where we'll get the latest barometer of the health of the Australian economy. The IMF cut global health forecasts, citing downside risks from trade tensions. The main risk event for the AUD remains the U.S monetary policy decision later in the month. Technical remain the same.
USD
U.S Existing Home Sales fell by 1.7% in June, a larger fall than expected, the Richmond Fed Manufacturing Index came in at -12, below expectations of +5. The USD made gains after the announcement that U.S Trade Representative Lightizer and Vice Premier Liu He of China will meet in Shanghai early next week. Stocks rallied by around 0.6% as earnings results were also better than expected. Flash Manufacturing & Services PMIs are released this evening. Again, it appears to be a quiet week for currencies and economic data in general.
EUR
The EU's Lamstrom announced that the EU will retaliate with 35bn EUR of tariffs if Washington applies duties on European cars. That's fighting talk and one we are all familiar with as both sides tend to lose out when it comes to trade wars and protectionism. To the data and EZ Consumer Confidence for July printed at -6.6, better than expectations of -7.1. Juncker reacted to the appointment of Boris Johnson by saying the EU aim to work with him in the 'best way possible'. Barnier reiterated the importance of ratifying the existing Withdrawal Agreement. Eurodollar fell in the wake of USD strength, AUD tracked sideways. Flash PMI's are released for France, Germany and the EU this evening.
GBP
Boris Johnson was appointed Conservative Leader and hence the new P.M of the U.K overnight. The Pound suffered in the run up but then strengthened after his appointment was announced. The Pound also wobbled after the BOE's Saunders said that the BOE's next move may not be a rate hike. This is obvious considering the Brexit deadline is around three months away. CBI Realised Sales are released tomorrow evening, the Pound remains vulnerable in the run up to the Brexit deadline, especially if Boris pushes the U.K closer to a no-deal. Or can he pull a rabbit out of the hat? Time will tell.
NZD
The Kiwi fell to 0.67 overnight, the USD powering ahead after better than expected earnings and the resumption of U.S China/U.S trade talks. No data to report locally. Kiwi to take its cues from the big dollar. AUD/NZD marginally higher.
Today’s data
AUD:
June Skilled Vacancies
USD:
July Prelim PMI, June New Home Sales
EUR:
July Flash PMIs
NZD:
June Trade Balance