Currency Update - Monday 20th January 2020

AUD

Friday’s highlight was the Chinese data dump which impressed as
one would expect in the aftermath of the signing of the trade deal with the US.
Chinese GDP came in at 6% q/y as expected (still vastly higher than the western
advanced world), but it was the Industrial Production y/y which surprised to
the upside, printing at 6.9% which was a 9 month-high and beating expectations
of 5.9%. Despite the solid Chinese data AUD was unable to advance into the end
of the week, steady or down against the majors. Today will be a quiet day with
the US on holiday. Local data for the week ahead is thin with the exception of
Thursday’s employment report. There are however Central Banks in action to keep
us busy, BoC BoJ and ECB all making interest rate decisions at some point
during the week with all three expected to leave rates on hold.

USD

AUD closed the week lower despite strong Chinese data on Friday
and the improvement in geo-political risks. We open at 0.6873 this morning, the
AUD facing renewed selling pressure against a strong Greenback, the DXY up
0.35% on Friday (the DXY index measures USD strength against a variety of other
currencies). Wall Street continued to make gains however Building Permits and
UoM Consumer Sentiment both missed expectations albeit to a small degree. It
will be a quiet day ahead with the US observing Martin Luther King Day.

EUR

AUD continues to trade a narrow range either side of the 0.62
handle, this morning opening just shy of the mark at 0.6196. Euro Zone Final
CPI came in exactly on expectations on Friday at 1.3% for the year. The ECB is
in action on Thursday evening in what will be the highlight of the EZ data
calendar for the week, the ECB is expected to leave rates on hold.

GBP

AUD closed the week lower, opening at 0.5284 this morning. UK
Retail Sales on Friday missed expectations again, printing at -0.6% (+0.5%
expected). This is the fifth consecutive month that UK retail sales have failed
to grow, with four of the last five reads showing a contraction and the fifth
showing no change at all. The UK data for the week ahead is light until Friday
evening’s Flash Manufacturing and Services PMIs.

NZD

AUD made gains here on Friday after the impressive Chinese data
releases, only to give them up over the evening session, opening this morning
at 1.0385. No Kiwi data due today, in fact the whole week is pretty quiet
across the ditch.