Currency Update - Wednesday 14th August 2019

AUD

The AUD opens today higher today after some de-escalation of the US-China trade war after the United State’s decided to delay some tariffs until the 15th of December. This has caused a sharp bounce in risk assets across the board with the NASDAQ bouncing up 2% and the S&P500 gaining 1.8%. Oil led the charge on the commodity front with a 3.5% gain and the AUD was given a much-needed boost. Important local Wage Price data is due this morning (RBA has cited this as a key determinant of interest rate policy), followed by a dump of Chinese data, so plenty of wood for the fire.

USD

News was relatively quiet for the USD outside of news that the US will be delaying additional Chinese tariffs. CPI data came out slightly ahead of expectation which saw some firming of the USD which made some ground prior to the tariff announcement. The delay of the tariffs came after some Chinese-US officials held some discussions via conference call which saw an agreement to further talks to take place in two weeks. The US Treasury then reported that some items had been taken off the tariff list citing health, safety and national security concerns. Traders took the news as a possible capitulation by Trump and the bulls were off pumping up risk assets and commodities.

EUR

More concerning data out of Europe with the German ZEW survey was very weak printing to -44.1 compared with a forecast of -28.0 which was the lowest since 2011. This pushed the Euro lower against the greenback before the tariff announcement which then sent the EUR higher as the greenback fell across the board. Continued recent dissaponting German economic data has sparked fears of an upcoming recession in Germany, so tonight's German GDP figure will be watched closely.

GBP

Some good news for the embattled Pound Sterling after the UK posted some impressive jobs data. The jobless rate edged up to 3.9% and the average earnings rate excluding bonuses came in at 3.9% - the highest reading in 11 years. Wages were helped by some increases for NHS staff and minimum wage increases but it’s a welcome bit of news that gave the GBP some support against the greenback and Euro. UK CPI is due for release this evening, as well as PPI for July.

NZD

The NZD is still very much in the doldrums despite some positive data in the form of July’s New Zealand food price index. There was some sharp improvement with prices moving up a whole 1.1% on the month. This is a signal for inflationary pressure though this was insufficient for any meaningful rally in the NZD. Likely this positive piece of data is being drowned out by the other inflationary indicators recently that have proved less positive. Moving forward while there is little to suggest we’ll see another NZD rate cut next month the demand for the currency remains muted.


Today’s data

AUD:

  • Westpac Consumer Sentiment 10.30am

  • Wage Price Index q/q 11.30am

USD:

  • No data

EUR:

  • German Preliminary GDP q/q

GBP:

  • CPI y/y, PPI Input m/m

NZD:

  • No Data

CNY:

  • Fixed Asset Investment, Industrial Production both at 12.00pm

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