Currency Update - Monday 13th January 2020

AUD

Domestic data has had a strong start to the year, the three major data points last week all exceeding expectations with Retail Salescompleting the trifecta on Friday, printing at 0.9% (0.4% exp). A quieter local
economic calendar this week with Friday’s Chinese GDP number the major release
however the focus of the week will likely be the signing of the US-China phase
one trade agreement (due on Wednesday).  Following the formalities of
completing the phase one deal, market attention will quickly turn to the
probability and particulars of a phase two deal. AUD has the potential to
strengthen with a reduction in geopolitical risk and improvement in market
sentiment on the back of the solid local data prints.

USD

US job numbers missed on Friday night (145k vs 162k exp) and
were compounded by a miss in Average Hourly Earnings (0.1% vs 0.3% exp), the
combination allowing AUD to regain the 0.69 handle for a short time, opening
only slightly off the highs at 0.6898. US equities struggled in the aftermath
of the unusually weak employment report, however DXY was relatively unchanged.
The week ahead bears some important US data points; CPI on Wednesday night and
Retail Sales on Thursday night. AUD support and resistance sit 50 ticks either
side of 0.6900.

EUR

AUD regained the 0.62 handle on Friday for the first time in a
week, reaping the benefits of a week of strong domestic data. Friday’s European
data came and went without fanfare, French and Italian Industrial Production
numbers both beating expectations. Data from the EZ is interspersed throughout
the week ahead, the highlight being ECB Monetary Policy Meeting Minutes on
Thursday night with the ECB’s Lagarde speaking shortly thereafter as well.

GBP

AUD opens at 0.5278 this morning, just shy of 1-week highs,
continuing the positive trend in AUD fortunes to start 2020. The gains the
result of impressive domestic data rather than GBP weakness. Medium impact data
from the UK is scattered over the week ahead starting tonight with GDP and
manufacturing Production numbers. Brexit Day is now less than three weeks away,
so Brexit headlines will likely resume in short time as well.

NZD

AUD was able to stem the bleeding somewhat against NZD at the
back end of last week, defending the 1.03 handle and opening at 1.0383 this
morning. Impressive Aussie data formed the basis of the defence in the absence
of any data from across the ditch. Kiwi data this week is limited to tomorrow
morning’s NZIER Business Confidence numbers.