Currency Update - Thursday 12th September 2019
AUD
The Aussie Dollar is doggedly holding onto recent gains despite some USD strength giving it a boost across the majors. With some support coming from trade-positive sentiment it’s currently battling with some average domestic data. The recent gesture of the Chinese government to cut the RRR rate in lieu of escalating the trade war is not lost on anyone and this is a key source of strength for the Aussie Dollar as it attempts to consolidate its recent stretch of wins. In another positive move, China’s finance ministry has provided a list of US goods to be exempted from tariffs which further the trade positive sentiment. There’s a big day of data today so we’ll need all the help we can get if some of these data points cause a flutter in the Aussie Dollar.
USD
The US Dollar opens higher this morning, boosted by solid US PPI numbers, which has pushed the greenback to 1 week highs. Unexpectedly high draws on US crude oil did little to help oil prices as the OPEC’s monthly report drags crude lower citing global economic slowdown and falling demand. This impacted sensitive currencies such as the Loonie and pushed the USD higher. It’s been otherwise quiet for the USD ahead of US CPI set to come out at 10:30 pm Sydney time.
EUR
A difficult day for the Euro as the beleaguered currency printed a fresh daily low during the American session before staging a modest comeback. A negative sentiment is weighing on the Euro ahead of the ECB’s meeting tomorrow and likely rate cut. This is pushing the Euro lower across the board with the keenest loss felt against the USD after the US posted a higher than expected PPI reading. While markets are currently pricing in a 20-basis point cut tomorrow out of the ECB traders will be paying close attention to the wording in the decision as it relates to QE. Another round of QE will be a contentious decision and may become a serious source of Euro weakness.
GBP
The Scottish High Court has thrown a spanner in the works for Boris’ Brexit ambitions when they ruled that Johnson’s decision to suspend the Parliament was unlawful. When questioned over whether Theresa May’s Withdrawal Agreement will be brought back Boris made it clear in no uncertain terms that this was not an option. Entertainment value out of UK political theatre wasn’t enough to save the GBP from sliding against the USD during the American session posting a modest loss as we begin today.
NZD
More bad news for the Kiwi Dollar today as the recent burst of USD strength has sent the Kiwi floundering. The trade positive sentiment that has helped the Aussie Dollar consolidate recent gains despite USD strength offered some assistance in so much as the Kiwi dollar did hold above the 21 exponential moving average. Looking ahead the New Zealand’s Food Price Index will be key to help the Kiwi push on and upwards against the greenback.