Currency Update - Friday 17th January 2020
AUD
The quiet domestic calendar and range-bound intraday
trading is set to continue today with the exception of Chinese data
at 1pm with GDP, Industrial Production and Fixed Asset Investment. If the
data comes out strong and the markets doesn’t treat the release too cynically
then that may help the Aussie recover some of the losses suffered overnight.
USD
Last night's US data dump was positive across the board. As a
result, AUD/USD came off yesterday’s highs to reach a low of 0.6888 before it
found bidding interest to help it recover back up to just below the 0.69
handle. To the data, and the jobless claims rate slipped to 204,000
from 214,00 and the Philly Fed manufacturing index jumped to a six month
high of 17. Retail sales came in on expectation at 0.3% while the report that
strips out auto sales showed an increase of 0.7%. All in all, US economy is
healthy and doing well and the trade spat with China has done little to
materially impact the economic fundamentals powering the US. Ahead today things
quieten down with nothing until early tomorrow morning where we have some
Building data and some moderate impact FOMC commentary.
EUR
For almost the entire week AUD/EUR has been opening at or around
0.62 and today is no different. The ECB Minutes showed cautious optimism about
the growth and inflation outlook in the EU and indicated the hurdles to further
easing were high. The Minutes injected some life into Euro and encouraging some
bidding interest that eroded all of the gains made by the Aussie during
yesterday’s trading. There was some early European data with German December
CPI unchanged from the initial reading at 0.5% for the month and 1.5% annually
though this was met without much interest from markets. No other significant
data to report to finish up the week.
GBP
Pound Sterling has broken this week’s deadlock against the
Aussie Dollar with a strong recovery sending AUD/GBP to a low of 0.5270.
There is still strong bidding interest below 0.53 for the Australian Dollar so
predictably we have already seen a small move up closer to 0.5280. According to
the Bank of England credit conditions survey, lending to corporates fell to a
level last seen during the credit crisis – a drop of 9.2% in the final quarter
of 2019. Keep in mind it only fell by 3.5% in the third-quarter. This is
worrying seeing as credit is crucial for business, and tighter conditions is
likely to hurt the economy. Despite this the selling pressure on the Aussie was
enough for Pound Sterling to breakout higher and thus far has maintained the lead
heading into the day. Retails sales due tonight.
NZD
The Australian Dollar has found its footing after trading
heavily yesterday. Markets traded AUD/NZD from a high close to 1.046 down to
where markets open this morning just below 1.040. Buoyed by trade optimism, the
NZD has found itself a few friends that helped lift the currency up from a
recent string of losses against the Aussie. No other data to report.