Currency Update - Thursday 26th September 2019
AUD
No local data to report yesterday and that will continue in to next week with Tuesday’s RBA interest rate meeting looming large, the specter of a 25 basis point now at 72% this morning. Overnight there was renewed optimism surrounding the trade negotiations between China and the US, with headlines suggesting China was ready to buy American pork, having already made its first soy bean purchase earlier in the week. Trump also added that a trade deal with China “could happen sooner than you think”. However the improvement in sentiment wasn’t enough for AUD to capitalize to a significant degree against any of the major crosses, the weight of an impending interest rate cut too big a burden.
USD
The greenback enjoyed renewed strength overnight, making gains against all comers, the DXY measure gaining 0.65%, whilst US equity markets also reversed losses from earlier in the week. Positivity in the China Trade negotiations (see above) was complemented by bumper New Home Sales data for August (7.1% actual vs 3.8% expected and 713k actual vs 659k expected) and positive revisions for prior numbers. A new impeachment investigation on Trump relating to a phone conversation with the Ukrainian PM was not enough to sour the buoyant mood, an impeachment remaining very unlikely as it would require approval from two thirds of the house. Tonight we get a look at final USD GDP figures for Q2.
EUR
AUD opens flat at 0.6167, having erased yesterday’s losses on the back of improved risk sentiment, albeit a very tight trading range. No data to report from The Zone overnight but outgoing ECB President Draghi is due to speak again tonight.
GBP
AUD creeping marginally higher against GBP in the last 24 hours, trading at 0.5464 this morning. In Brexit developments, as parliament resumed, UK PM Johnson remained defiant in the face of his Supreme Court loss, saying that parliament was paralysed, the Supreme Court was wrong and that the UK would leave on October 31. He called on opposition parties to either call no-confidence vote or move out of the way and stop blocking Brexit. No data of note, however Bank of England Governor Carney is in action tonight.
NZD
Yesterday the RBNZ left interest rates unchanged at 1.00% as expected, initial gains for NZD immediately reversed with market focus firmly on risk sentiment (trade war, Brexit and Trump impeachment to a lesser degree). AUD remains towards the upper bounds of the year’s trading range, opening at 1.0765 this morning. No economic data due for release until Monday’s ANZ Business Confidence numbers.