Currency Update - Tuesday 3rd September 2019

AUD

Currency markets off to a suitably quiet start to the week with the US on holiday and a pause in the trade war hostilities. Local data yesterday showed a rise in Company Operating Profits of 4.5% for Q2, beating expectations of 2.1% and Chinese Caixin Manufacturing PMI also outperforming (50.4 vs 49.8 exp). AUD was hardly moved by the decent data prints, with focus no doubt firmly on the Retails Sales & Current Account figures due this morning and of course the RBA’s interest rate decision this afternoon. Markets are offering just a 12% chance of a rate cut after the RBA has indicated it is in a “wait and see” mode and would need an accumulation of evidence to support a lower cash rate. With the RBA likely to keep its dovish, cautious tone in its post-meeting statement as well, it’s unlikely we’ll see fireworks this afternoon.

USD

AUD trading a very tight 25 pip range against USD over the last 24 hours, opening at 0.6713 this morning, unsurprising with the US enjoying a public holiday yesterday. US data resumes tonight with ISM manufacturing PMI and the US and Chinese trade delegations are attempting to set an agenda for a resumption in negotiations. Technical levels remain in place, support sits at 0.6700 and resistance forms around the 0.6750 mark.

EUR

AUD hovered in a 20 pip range against EUR overnight, opening at 0.6122 this morning. The EUR did continue to give up ground to a stronger USD, falling to 1.0958 although AUD was unable to capitalise. European equities, on balance, were slightly higher on the day and there were Brexit comments from PM Johnson (see below). No data from The Zone tonight.

GBP

In an otherwise stagnant session for currencies, a weaker GBP allowed AUD to take advantage, opening higher at 0.5566 this morning. UK Manufacturing PMI fell to 47.4, down from 48.0 and below expectations of 48.4, but it was the Brexit headlines that moved markets. First reports surfaced of a potential UK election to be called in the coming days while later reports suggested UK lawmakers would move to force PM Johnson to seek a 3 month Brexit delay if a deal was not made with the EU by the summit on October 19. In response, UK PM Johnson said that if there was a successful vote to delay Brexit he would look to call a vote on a snap election. He said that a move to further delay Brexit now would make negotiations impossible at a time when the chances of a deal were rising and he re-stated his view that a deal would be achieved at the October EU Summit. GBP weakening as the possibility of hard-Brexit increases. Boris is sticking to his guns. No economic data from the UK tonight.

NZD

AUD is off its highs against NZD, trading slightly lower at 1.06448 this morning after a solid AUD performance in August. With an empty NZ economic calendar for the week, today’s RBA meeting and tomorrow’s Q2 GDP figures will dictate movements in AUDNZD. NZDUSD continues to drive lower with the August 2015 lows of 0.62 seemingly the target.


Today’s data

AUD:

  • 11.30 am Retail Sales

  • 2.30pm RBA Interest Rates Decision

USD:

  • ISM Manufacturing PMI

EUR:

  • No data

GBP:

  • No data

NZD:

  • No Data

CNY:

  • No data

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