Currency Update - Thursday 22th August 2019

AUD

Currency markets have hunkered down ahead of the Annual Federal Reserve Policy Symposium in Jackson Hole which starts tonight and finished on Saturday. Such was the calm, GBPUSD and USDJPY were the only two major currency crosses to trade more than a 25 basis point range overnight! This year's symposium held in the Colorado-based ski resort is titled "Challenges for Monetary Policy". As it will be attended by prominent central bank governors and policymakers, 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. Low-impact data due this morning in the form of Flash Manufacturing and Services PMIs is the last local data due for the week and unlikely to move AUD around.

USD

AUD unchanged, opening at 0.6784 after failing a test of 0.6800 overnight. Last night’s FOMC minutes weren’t as dovish as some were expecting. The minutes suggested that the recent 25bp move was a "mid cycle adjustment" rather than a pre-cursor for any further pre-defined cuts. A number of officials stressed the need for flexibility while there were members who called for a 50 point cut whilst others wanted rates to stay the same. It would seem opinion amongst Fem members about the health of the US economy is decidedly divided. US equities and Treasuries were firmer, Wall St up to the tune of 1% and Trump had his daily Twitter rant attacking the Fed over interest rates. Data tonight from the States is limited to Flash Manufacturing PMI with focus firmly on the Jackson Hole Symposium.

EUR

No movement here either, AUD opening at 0.6116 this morning. Tonight’s Flash Manufacturing and Services PMIs releases for France, Germany and The Zone as a whole could provide impetus for some volatility, in particular the German numbers will be closely watched to gauge the extent to which the recent pronounced economic weakness has continued into July.

GBP

AUD opens slightly higher this morning at 0.5591 with GBP slightly weaker after a comment from a French official that a no-deal Brexit is now the baseline scenario. UK Public Sector Net Borrowing was slightly better than expected but was overlooked by markets. No data from the UK for the rest of the week.

NZD

AUD keeps winning the small battles here, edging higher to 1.0591 at the time of writing, after making a sustained test of the 1.06 handle overnight. Whilst moving at a glacial pace, AUD has managed to gain almost 2.5% on NZD in the two weeks since the RBNZ surprise 50 basis point interest rate cut and is sitting at 2 ½ month highs. No data from NZ tonight.


Today’s data

AUD:

  • No data

USD:

  • Jackson Hole Symposium begins

EUR:

  • Flash Services and Manufacturing PMIs from Germany, France and The Zone as a whole

GBP:

  • No data

NZD:

  • No data

CNY:

  • No data

FX CorpFX Corp Pty Ltd