Currency Update - Friday 27th September 2019
AUD
Swings and roundabouts with the Aussie Dollar opening this morning within 5 pips of yesterday’s opening. Supported by sentiment that decreases the likelihood of a rate cut next week, the Aussie Dollar made a few quick runs up against the USD overnight but these gains were erased on the back of uncertainty surrounding Trump’s impeachment. Geopolitical tension with Iran also pumped the brakes on risk appetite. Futures markets have a 75% chance of an RBA rate cut on Tuesday, so expect some downside pressure on the Aussie Dollar if they do indeed cut rates as markets make up for the difference. On the other hand, if rates are left on hold, AUD should see some decent upside. With no local data between now and Tuesday, expect trading to be fairly flat for the Aussie Dollar in the absence of any big risk-moving headlines.
USD
The impeachment investigation continues to unfold much to the chagrin of President Trump and this uncertainty is making its mark on US equities which finished the day marginally lower. Political uncertainty surrounding Trump’s future and geopolitical tension with Iran has helped firm up the USD against the majors, pushing Euro to recent lows and keeping the Aussie Dollar in check. US data saw Pending Home Sales rise 1.6% month to month in August though markets had little reaction to the news. Tonight, we’ll see USD Core Durable Goods Orders and USD Personal Spending coming out which are all expected to post strong results.
EUR
A quiet day for the Euro that took some losses against the greenback and Aussie Dollar. Aussie Dollar is still a ways off when compared to September’s highs but we’ve strung together a few days of quiet gains. German Consumer Confidence came in with a surprising win, beating expectations, though markets didn’t have much of a reaction. The EUR is running on sentiment at the moment and much like the Aussie Dollar, isn’t finding much help given global uncertainty.
GBP
Some more Brexit news today with UK Brexit Secretary Barclay announcing that he’ll be having a meeting with Barnier on Friday with some discussions around a non-permanent backstop. PM Johnson took the news as defiantly as ever, claiming that a deal was still some way off. The Aussie Dollar gained a little on the Pound off the back of this minor development, adding to the streak it’s been on for the last week. Pound Sterling took some more losses against the greenback amid USD strength and should finish the week on a low-note without much data to help.
NZD
USD strength amid Trump’s impeachment and geopolitical worries with Iran has been of no benefit to the beleaguered Kiwi Dollar which has taken another tumble against the greenback. Despite a decent few days which saw the Kiwi put some runs on the board against the USD, the recent surge in USD strength has erased much of these gains. Westpac analyst Imre Speizer weighed in stating “[the] NZ’s lackluster fundamentals, which will be updated in a forward-looking sense by the surveys next week, should maintain downward pressure on the NZD”. Moving forward the Kiwi will live and die off risk sentiment without strong domestic data to give it a hand.