Currency Update - Monday 2nd September 2019

AUD

AUD remained under pressure into the end of last week, Friday’s Building Approvals m/m suffered a big miss (-9.7% vs 0% expected), US data was mixed and Chinese data on Saturday was as expected. Simmering trade tensions between the US and China continued over the weekend with the introduction of US$110 billion dollars of tariffs of Chinese goods. Today’s local data in the form of Company Operating Profits q/q and Chinese Caixin Manufacturing PMI are likely to have muted importance with the US enjoying a Labour Day holiday. Currency markets should heat up tomorrow with Retails Sales before the RBA’s monthly interest rate meeting, where most economists predict no change to current interest rates at 1%.

USD

AUD is clinging on to the 0.67 handle, opening at 0.6725 this morning. US data on Friday night was mixed; Personal Spending m/m was better than expected (0.6% actual vs 0.5% expected) as was Chicago PMI (50.4 actual vs 48.1 expected), however Core PCE Price Index missed the mark. USD was slightly weaker after the data but firmed up before the end of the session. Trump to to Twitter to declare that the Euro was “dropping like crazy” giving them a big advantage in terms of exports and manufacturing. He also took another swipe at the Fed in saying “We don’t have a Tariff problem (we are reigning in bad and/or unfair players), we have a Fed problem. They don’t have a clue!” No US data tonight due to the Labour Day holiday, support for AUD is at 0.6700 and resistance will likely form around 0.6770.

EUR

AUD starting the week against EUR on the front foot at 0.6119 with EUR losing favour on Friday evening in the wake of mixed European data and a break lower of the EURUSD beneath the psychological 1.10 level. Poor German data continued with Retail Sales for July showing a contraction of 2.2%, a technical recession is looming large for the largest economy in Europe. A quiet week of data from The Zone ahead with only scattered low-impact data due for release.

GBP

AUD steady against GBP over the weekend, opening at 0.5532 this morning. On the Brexit front; UK lawmakers lost the court case seeking to block the proroguing of Parliament as a Scottish judge ruled against them. Further, UK PM Johnson spoke saying that cancelling the referendum is the worst thing for democracy. He went on to say that if the EU think Brexit can be stopped they are less likely to give them the deal that they need. Less than two month to go until the 31 Oct deadline and hard Brexit is still gathering momentum. Manufacturing PMI due for release tonight.

NZD

AUD continues to surge against NZD, opening at 1.0677 this morning, this morning’s better than expected Overseas Trade Index report unable to halt the AUD progress. Little in the way of data from across the ditch this week, tomorrow’s local RBA meeting and Wednesday’s local GDP figure to provide the impetus for moves on this cross.


Today’s data

AUD:

  • Company Operating Profits 11.30am

USD:

  • Labour Day Holiday

EUR:

  • No data

GBP:

  • No data

NZD:

  • No data

CNY:

  • Caixin Manufacturing PMI 11.45am

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