Tight Ranges and Low Vols to Finish the Week
AUD
The Aussie Dollar was trading in tight ranges again overnight with currency markets taking a breather as the Thanksgiving long-weekend brings a slow-down to markets. Asian Equity markets brought little to talk about with the ASX and Shanghai Comp trading either side of flat. The AUD could have been a lot worse for ware considering a sharp fall off in Iron-Ore Futures prices as Iron Ore lost out -3.8% yesterday. It should remain to be a quiet session in currency markets with little stand-out data, with Australian retail sales for October the only meaningful release. This report should show a strong increase of an estimated 3.0% m/m as easing lockdown restrictions and increasing mobility lifted spending.
USD
The AUD/USD was just slightly weaker overnight, but still sliding to new lows not seen since the end of September, trading at 0.7189 right now. With dull trading conditions, there’s been little news of excitement and Greenback looks likely to maintain its leadership into the weekend. The major talking point remains to be Joe Biden announcing the release of oil from the US’s strategic stockpile in an attempt to drive down energy and crude oil prices. Biden authorised the release of 50m barrels of oil, in a move co-ordinated with China, India, Japan, South Korea and the UK. As the quiet week comes to an end, we look forward to a whole lot of Fed talk as Fed Char Powell along with FOMC speakers Williams and Clarida will address markets.
EUR
The AUDEUR was also trading lower but still maintaining it’s position in the 0.64s, trading at 0.6413 this morning. European Equity markets were ticking higher FTSE, DAX, and CAC up +0.3%, +0.2%, and +0.5% respectively. The only release of note was the European Central Bank minutes from the October policy meeting. It was noted that it was hard to reconcile the market view of rates with ECB policy guidance with inflation likely to rise a little more before falling in 2022. It was also noted that the ECB will likely end the net purchases under PEPP to end March 2022, although flexibility is required.
GBP
The AUDGBP continues to remain within the same range it’s been travelling in for over a week now, toying with the 0.54 handle and trading at 0.5395 at the moment. The pair has been relatively boring even with Bank of England Governor Andrew Bailey signalling that policymakers have effectively abandoned forward guidance as a way of guiding investors about the likely path of interest rates. Bailey was answering questions at Cambridge University and stressed that "The boundary between a commentary and guidance is quite murky, actually, when you think about the words we use," some interesting commentary after the BoE surprised markets by keeping its rates on hold.
NZD
The AUDNZD was the only pair to improve slightly, continuing its run north at the moment, trading at 1.0488 this morning. The pair continues to rise after the Kiwi dollar disappointed currency markets despite increasing its official cash rate by 25 basis points on Wednesday. Some promising news for the Kiwis as New Zealand’s Covid-19 Response Minister Chris Hipkins said that fully vaccinated New Zealanders and other eligible travellers from all other countries could start travelling to New Zealand without quarantine from February 13. Otherwise in terms of macroeconomic data, any sort of excitement will have to be put on hold for the moment.