Currency Update - Thursday 29th August 2019

AUD

The Aussie dollar has slipped slightly lower overnight but has largely remained range bound. Global uncertainty and risk off sentiment has stagnated the AUD and kept trading extremely flat. We have made some gains this morning as we see some heightened appetite for risk creep into the market as markets digest Trump’s latest pro-China tweets. Further upside for the Aussie dollar can be seen in the latest comments from US Treasury Secretary Steve Mnuchin and US Fed San Fran President Marcy C Daly and their support of easing monetary policy due to economic worries. Moving forward we have Australian Private Capital Expenditure data out at 11:30am today which could inject some life into the embattled Aussie Dollar.

USD

The recent improvement to risk sentiment has assisted the USD make some gains on the Japanese yen and Wall Street have bounced overnight with the S&P moving up 0.8%, assisted by solid gains from the energy sector. Trump took aim at the US Fed again claiming that they could not “mentally” keep up with the competition in what appears to be a more focused campaign of his to pressure the US Fed to fall in line with his own monetary policies. The US Fed member Barkin has most recently said that the US economy “appears great” and made comparisons to weak international economies. The presence of a vocal hawkish coalition of US Fed members could certainly act as an anchor on more aggressively dovish moves for the September rate decision. As of this week, markets have priced in with near certainty that rates would be lowered by a quarter point at the September meeting.

EUR

A quiet day for the Euro with little news outside of confirmation that BTP bond yields were falling and Italy has finally closed the door on the need for a fresh election. The Italian Five Star Movement (M5S) and center-left Democratic party (PD) have reached an accord for a new government with Conte as prime minister. This injects some stability into the region but has had little impact on currency markets with the Euro trading slightly lower against the greenback.

GBP

The recent streak of gains the Pound has scored on the greenback has come to a screeching halt today as markets absorb the latest round of Brexit drama. The risk of a no deal Brexit has jumped significantly with the Boris government’s announcement that parliament would be suspended as of the 12th of September. While not entirely unexpected that Boris would attempt to restrict the opportunity for opposing MPs to fight his no-deal Brexit plan, it sent the Pound plummeting against USD with the biggest one day fall in 3 weeks.

NZD

The beleaguered Kiwi enters another day mired at 2015 levels amid US-China uncertainty and lack of encouraging economic news at home. While the data releases this week have been minimal we did see disappointing data come out of Australia as it relates to construction work which has acted adversely on the NZD to bring it down to fresh lows against the greenback. Traders are now looking ahead to the ANZ’s Activity Outlook and August Business Confidence to see if any significant buying pressure can be justified.



Today’s data

AUD:

  • 11.30 Private Capital Expenditure q/q

USD:

  • Prelim GDP q/q

EUR:

  • German Prelim GDP m/m

GBP:

  • No data

NZD:

  • No Data

CNY:

  • No data

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