Currency Update - Tuesday 21st January 2020

AUD

The quiet start of the week has
helped AUD/NZD continue a recent sideways trend with markets trading at 1.0401
at the time of writing. No news yesterday and little news ahead today so expect
a flat day of trading and more of the same.

NZD

Pound Sterling quickly pumped the
brakes on the Australian Dollar yesterday after AUD/GBP bid its way above 0.53.
GBP found its feet in the evening and AUD/GBP slipped down 35 pips before fears
over a hard Brexit helped The Australian Dollar consolidate closer towards
0.53. The fear came after UK chancellor Sajid Javid said on Brexit “There will
not be alignment, we will not be a rule-taker, we will not be in the single
market and we will not be in the customs union – and we will do this by the end
of the year”. Ahead today we have data from the UK in the form of the Average
Earnings Index which is set for release at 8pm.

GBP

The United State’s absence from the markets encouraged a slow day for the globe and Europe was no exception. The Australian Dollar managed to move up a few pips to just above the 0.62
handles which have been a familiar reading for January. On the data front,
German PPI improved to -0.2% from -0.7% which while is an encouraging sign, is
still a negative reading. The fear is that the recent weak PPI readings may
trickle down to a move higher in CPI in the months to come. Ahead tonight we
have the German ZEW Economic Sentiment which historically has provided some
movement in AUD/EUR rates so market orders make a lot of sense today to target
movement outside of the 0.62 handles.

EUR

The quiet day yesterday saw the USD Index consolidate its recent gains and AUD/USD continued to trade on the soft side on its way to a low of 0.6855 before demand materialized ahead of the
recent lows of 0.6850. The US is still away making the most of the celebrations
so no data out today.

USD

A quiet day yesterday with the US out observing Martin Luther King Day. US Equity markets were closed and there was little movement outside of the Australian Dollar and most majors logging
marginal losses against a firming greenback. Trading ranges were tight and
there wasn’t much in the way of news flow to help prompt much movement. The
global economy continues to deteriorate as per the IMF who are now predicting
the global economy will grow by 3.3% - a slight downgrade from previous
guidance of 3.4%. Ahead today we have another quiet day with the US still not
in full swing until tomorrow and there is little data scheduled for today to
make much of an impact on currency markets.