Currency Update - Thursday 23rd January 2020

AUD

Equity markets in Asia and the US have come back into positive
territory which, despite increasing fears over the escalating Coronavirus,
could be a good indicator for risk. Despite the absence of significant data,
the Australian Dollar has found some footing against the majors with the recent
losses seemingly halted for now. The one-piece of data we had yesterday –
Westpac Consumer Sentiment – came out with a slightly improved reading of -1.8%
over the previous reading of -1.9% however there was little reaction from
markets. Ahead today we have a busy morning and very quiet afternoon with the
big news coming from our Employment data out at 11:30am. After lunchtime expect
the existing trade ranges to stay intact with any movement driven by
geopolitical or economic news.

USD

A 25 pip trading range was all the Australian dollar saw yesterday and
that is expected to continue today with markets trading AUD/USD in the middle
of the highs and lows at 0.6844 at the time of writing. After initially trading
on the softer side the Aussie Dollar was moving higher in early North American
trade, making new highs of 0.6856. Importers meanwhile have an ally in Donald
Trump who again voiced his displeasure over the strength of the USD and US
interest rates that are “too high”. He also said that the Dow Jones would be up
to 10,000 points higher if it weren’t for the Fed. US Existing Home Sales rose
3.6% to 5.54 Mio in December, beating forecasts of a 1.5% increase to 5.43 Mio.
Reactions were subdued but it was enough for the Aussie to come off the highs
and flatten out close to we’re at today. Ahead today is a quiet day with little
data to report.

EUR

The Australian Dollar has drifted lower against the Euro following a
fairly flat day of trading. Markets are sitting around 0.6170 and with the
absence of news ahead today we can expect the market to be trading around this
level for the rest of the day. On the data front French manufacturing
confidence for January came in at 100 (101 forecasts) with Italian industrial
orders falling by 0.3% in November. This was enough to send AUD/EUR slightly
lower and without any other major news we’re largely sat around this level.
Tonight we have the latest monetary decision out of the EU which is largely
understood to remain unchanged.

GBP

Fears over a hard Brexit have seemingly not helped the Aussie find much
support as Pound Sterling continues to gather strength with markets trading
AUD/GBP just above the 0.52 handle. Pound Sterling has caught some aggressive
bids after the latest CBI report showed that the UK manufacturing sector
started the year on a strong footing. Adding to this, the Quarterly Business
Situation index – the gauge of optimism in the manufacturing sector – rebounded
sharply to +23 in January from -44 in October and marked its highest level
since April 2014. This has created an optimistic GBP which has surged ahead
against the majors. No data ahead today.

NZD

The Australian Dollar has found its feet after a difficult week for the
importers with markets coming up from lows of 1.0364 to where markets are
trading at 1.0383 at the time of writing. The risk coming out of the markets
has impacted the pair and flattened their respective trade. With employment
data out today for the Australian Dollar and a quiet day for NZD we could see
an opportunity to push higher if we see strong results.