Currency Update - Friday 23rd August 2019
AUD
AUD traded on the back foot overnight, moving lower against the majors with the exception of the NZD. The usual risk related ebb and flow played a part albeit for a different reason; South Korea announced they had not renewed their intelligence sharing accord with Japan, stating that Japan had made “grave changes to the environment for bilateral security”. US strength was apparent with positive comments from Fed speakers and the GBP gained favour with constructive declarations from key Brexit stakeholders, the AUD and the NZD remaining friendless. Central Bank comments from the Jackson Hole Symposium to start tonight and the G7 meeting on the weekend both have the potential for market-moving comments.
USD
AUD has traded a 28 pip range against USD for an entire week, starting Friday toward the bottom of the range at 0.6757. Despite softer than expected PMI results from the US which dragged equities lower, the USD was still on the front foot with comments from the Fed’s Harker who was typically hawkish. He said that he doesn’t see the need for another rate cut, and that the Fed should hold “for a while”. He added that he doesn’t see the need for further stimulus with inflation moving up slowly. When asked about Trump he said the Fed are not “clueless” and that he is more worried about tariffs impacting consumers. Later adding to the USD support, the Fed’s Kaplan said he would like to avoid another rate cut but that he is keeping an open mind about the need for further action. Powell’s statement to the press at Jackson Hole this evening the highlight of the evening ahead.
EUR
AUD opening toward the bottom of the week’s range at 0.6096 this morning. The European PMIs were better than expected with France, Germany and The Zone as a whole all outperforming. In a meeting between French President Macron and UK PM Johnson, Macron said that the EU needed visibility on Brexit within 30 days though expressed confidence that “something intelligent” could be found within that time frame and hinted that the existing Withdrawal Agreement could be renegotiated in a small way. German Chancellor Merkel added to the positive sentiment saying that work can be done on finding a regime that honours the Good Friday agreement and ensures the integrity of the EU single market. GBP was the major beneficiary from the positivity (see below). No data tonight.
GBP
GBP rallied strongly overnight, AUD losing 1.3% since yesterday, opening at 0.5514 this morning. The move was Brexit related with comments from French and German leaders (see above) offering positivity and hinting that the existing Withdrawal Agreement could be renegotiated in a small way. The UK PM himself again stated that Brexit would take place on October 31 with or without a deal though also said under no circumstances would they institute checks or controls on the Irish border. PM Johnson will make his debut appearance on the world stage at this weekend’s G7 meeting, his rambunctious style creating nerves for traders. No data tonight.
NZD
AUD has regained the 1.06 handle, shrugging off this morning’s slightly better than expected NZ Retail Sales Figures (0.2% actual vs 0.1% expected). NZD finding it hard to stop the bleeding, the RBNZ would be very happy with the results of their 50 basis point cut at the beginning of the month.
Today’s data
AUD:
Jackson Hole Symposium
G7 Summit (Sunday)
USD:
Fed Chair Powell's Speech
EUR:
No data
GBP:
No data
NZD:
No data
CNY:
No data