Currency Update - Tuesday 24th December 2019

AUD

The improved risk sentiment that has helped support the
Australian Dollar of late has been sustained with the most recent news that
China will cut tariffs on a wide range of goods. The reduction of levies on
more than 850 US imports will apply as of next month and has helped lift
equities and other risk assets. A predictably quiet week ahead should mean the
Australian Dollar will be trading in a fairly tight range to see out the rest
of the week.

USD

With the lift in sentiment the Australian Dollar has held onto
its recent gains against the USD with markets trading at 0.6923. With the
Chinese decision to reduce levies on US goods we’ve seen gains across all 3
major US indices while treasuries declined marginally.  The Dow Jones and
the S&P 500 are showing modest gains on the back of the news. Traders
shrugged off the poor durable goods report overnight which showed a 2% fall in
November, nowhere near the 1.5% increase that economists were expecting. The
Ex-transport measre was also weaker, coming in flat compared to expectations of
+0.2%.  The Chicago Fed National Activity Index for November meanwhile
printed at +0.56 to beat estimates of -0.33. The muted reaction to the big data
miss seems to be primarily a consequence of little interest nor liquidity as
the holiday season takes hold of the markets. The second round of US data saw
November New Home Sales rise by 1.3% to 719k, mixed against expectations of a
0.1% contraction to 732k due to significant negative revisions. Again, there
was limited reaction to the data.

EUR

We open at 0.6243 here ; a distinct lack of European news
and macroeconomic events have led to an extremely tight trading range for
AUD/EUR. The Australian Dollar is reacting to sentiment at this point and as
holiday season grips the markets there is little on the calendar to finish off
the week.

GBP

Pound Sterling continues to come under heavy selling pressure as
the profit taking on the Pound continues. Sterling enjoyed a very bullish run
between early September and the election night but now dealers have been
dumping the pound as they unwind their long-positions helping push the
Australian Dollar higher to 0.5345. Little news or data to report as we finish
up the week.

NZD

We're flat here as well, trading at 1.043 this morning. With the holiday
season underway we can expect a relatively tight trading range to finish up the
week that is devoid of news or macroeconomic events.

Wishing eveyone a great couple of days off.
We'll be back on deck Friday morning.