Currency Update - Monday 29th July 2019

AUD

With a tough week for the AUD in the rear vision mirror, we now look to the week ahead. Plenty of data due for release locally, the highlights being Building Approvals tomorrow (will signs of housing market stabilization continue?), Q2 CPI on Wednesday (RBA closely watching here after Q1’s 0.0% result) and Retail Sales on Friday (can we get some momentum before the effects of recent tax cuts kick in?). Add to the mix Chinese Manufacturing PMI on Wednesday followed by the general Chinese PMI on Thursday, and we have a recipe for increased AUD volatility. The Central Bank meetings from the UK and USA will drive the main international headlines this week (see below for detail).

USD

AUD opens at 0.6911 against the Greenback after a week which saw AUDUSD fall just shy of 2%. On Friday night US Q2 GDP grew at an annualised pace of 2.1%, beating the forecast of 1.8%. The beat was driven by strong domestic demand and consumer spending, with net exports and inventories contracting. Core PCE came in at 1.8%, below the expectation of 2%. US yields pushed higher with the Big Dollar bid against all comers. Trump was soon on Twitter commenting on the growth numbers: "Q2 GDP Up 2.1% Not bad considering we have the very heavy weight of the Federal Reserve anchor wrapped around our neck. Almost no inflation. USA is set to Zoom!" Trump’s comments reinforced by strong results from the technology sector coupled with increased optimism surrounding US and China trade talks helping equity markets rally to end the week at record highs. Plenty of US based data for the week ahead; Consumer Confidence, Manufacturing PMI and Employment data all due for release, accompanied by the Fed’s FOMC meeting on Wednesday evening (futures markets expecting a 25bp interest rate cut). AUDUSD support sitting at 0.6880 and resistance around 0.6980.

EUR

AUD opens at 0.6208 against The Single Currency. Little in the way of meaningful data out of the continent on Friday with no reaction to better than expected Italian confidence data. European equities meanwhile were mixed in early trade with the FTSE, CAC and DAX generally holding small gains soon after the open while the peripheral MIB and IBEX were down around 0.5%. Lots of medium impact data from The Zone this week with CPI on Wednesday evening the highlight, although the spotlight will be firmly on the Central Bank meetings in the UK and the US.

GBP

AUD opens at 0.5582 against GBP, firmly on the back foot after what turned out to be a positive reaction to the new PM Johnson. Onto Brexit and Johnson ruled out calling an election before October 31. Newspapers reported a discussion between Johnson and Merkel where he said the only way to make progress with negotiations is to scrap the backstop. This week’s main event will be the BOE interest rate decision on Thursday evening, with markets expecting no change to interest rates (further GBP strength?).

NZD

AUD opens at 1.0412 this morning against NZD, right in the middle of the last week’s trading range. Data for the week kicks off tomorrow with low-impact Building Consents number, however the Trans-Tasman battle will reach its zenith on Wednesday with Kiwi ANZ Business Confidence released at roughly the same time as Aussie CPI.


Today’s data

AUD:

  • HIA New Home Sales m/m

USD:

  • No data

EUR:

  • No data

GBP:

  • No data

NZD:

  • No Data

CNY:

  • No data

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