Currency Update - Tuesday 13th August 2019

AUD

Simmering geo-political tensions took their toll on global risk sentiment overnight, with risk-off associated assets continuing to benefit. The Hong Kong airport suspended flights due to the ongoing protests, China saying that Hong Kong shows signs of terrorism and that it has come to a “critical juncture”. In emerging markets, the Argentine Peso opened down 24.5% (not a typo) in the wake of primary elections at the weekend. Gold is up by another 1.2% and safe haven currencies (JPY/CHF/USD) continued to trade strongly against AUD. There were no developments in the US/China trade tensions, but the aforementioned risk and uncertainty is doing enough to keep AUD (and NZD for that matter) on the back foot. This week’s economic data kicks off this morning with NAB Business Confidence.

USD

Without any economic data to pick at, currencies traded on risk sentiment and AUDUSD trudged slowly lower, opening at 0.6751. Technical traders will tell you AUD carries short term risk to the downside, with the current level below the 100, 50 and 20 simple moving averages. US equities and treasury yields were off overnight circa 1.2% and 6 basis points respectively. Tonight we’ll get CPI data from the US and Chinese data starts to flow tomorrow. These data pieces may give us an insight into any economic damage inflicted by the Trade War, it could possibly start to build a case for stimulus or monetary policy easing on either side.

EUR

AUD is just clinging on to the sixties, opening at 0.6018 this morning after an evening devoid of economic data and with AUD languishing in a risk-rich environment. German Economic Sentiment and CPI due for release tonight, can the powerhouse of The Zone bounce back from recent soft data?

GBP

A familiar story here, AUD trickling lower overnight, opening at 0.5589 on the back of heightened risk tensions, but a big week of data from the UK will kick off tonight with UK Average Earning Index (CPI and Retail Sales to follow Wed and Thu respectively).  

NZD

An even battle between the Trans-Tasman cousins continues, AUD managing to hold on to last week’s post-RBNZ gains, opening at 1.0476 this morning. With no data from across the ditch due for release this week, this cross will be constrained to local data releases for the short term.


Today’s data

AUD:

  • NAB Business Confidence 11.30am

USD:

  • CPI m/m, Core CPI m/m

EUR:

  • German ZEW Economic Sentiment, German Prelim GDP q/q

GBP:

  • Average Earnings Index

NZD:

  • No Data

CNY:

  • No data

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