Currency Update - Monday 19th August 2019
AUD
A volatile week for equity markets finished positively with risk sentiment buoyed by some positive rhetoric from US/China trade talks and speculation from Europe that they will further stimulate the economy should growth continue to struggle. While trade war and Brexit developments are likely to continue to buffet markets over the week ahead, market participants will also be closely following the Annual Federal Reserve Policy Symposium in Jackson Hole, held from 22-24 August. This year's symposium is titled "Challenges for Monetary Policy". It will be attended by prominent central bank governors and policymakers, so markets will be keenly awaiting public remarks about the outlook for policy from the major central banks. Of most interest will be Chairman Powell’s remarks on Friday. A slow start to the week, local data commencing with tomorrow’s Monetary Policy Meeting Minutes.
USD
AUD trading a tight 19 point range in the Friday evening session, with mixed data from the US, opening the week at 0.6784. US Housing Starts for July fell by 4.0% to 1.1191 mio, worse than expectations of a 0.2% increase of 1.256 mio with negative revisions adding to the miss. Building Permits fared much better, rising 8.4% to 1.336 mio, beating expectations of a 3.1% increase to 1.270 mio with positive revisions. The University of Michigan Sentiment Survey fell to a 7 month low of 92.1, missing expectations to round-out the mixed bag. There was Fed commentary on Friday as well; Kashkari saying that there were mixed signals on the US economy at the moment though thought more stimulus was needed, advocating for an earlier rather than later response. In keeping with the confusing messages, Mester was a little less dovish in saying that she would have preferred to hold rates steady and that time was needed to determine the best course of action despite increased risks to the outlook. Support for AUD sits at 0.6750 and the 0.6820 cap remains in place for now.
EUR
AUD closed the week higher against EUR, opening this morning at 0.6110 after trading a lackluster 20 pip range on Friday evening. In response to recently soft German economic data, the German press reporting that Germany was ready to run a budget deficit if recession hit Europe’s largest economy. These comments were enough to offer mild support to EUR and also European equities which closed higher to the tune of circa 1.5% for the day. The data highlight from The Zone will be delivered on Thursday evening, with Services and Manufacturing PMIs from German and France, plus The Zone as a whole.
GBP
AUD closed a choppy week against GBP lower, opening at 0.5581 this morning. With little in the way of economic data from the UK this week, headlines on Brexit and the Jackson Hole Symposium along with the usual shifts in risk sentiment should drive markets.
NZD
AUD continues to inch its way higher, opening at 1.0552 this morning. Of interest this week will be Friday’s Kiwi Retail Sales figures which may provide some much-needed volatility in an otherwise closely fought battle. Well done to the All Blacks on retaining the Bledisloe Cup also.
Today’s data
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