AUD on Defensive as RBA Opens Door to Easing

AUD

The Aussie Dollar remains weak against major currencies, pressured by a still-strong US Dollar and surprisingly dovish Reserve Bank of Australia Meeting Minutes earlier in the week. The RBA had kept its key interest rate steady at 4.35% earlier this month, in line with market expectations, however, in a move that took many by surprise, the RBA suggested the possibility of a rate cut as early as February next year, should economic data continue to unfold as expected. The RBA's softer tone contrasted with the US Federal Reserve's caution on further easing and weighed on an AUD already burdened by risk aversion and worries about China's economy. Asian equities finished mostly stronger on Xmas Eve with the Hang Seng +1.1%, Shenzhen +1.3% while the Nikkei fell -0.3%. The ASX closed +0.2% as real estate and healthcare outperformed. No key data until Chinese Purchasing Managers' Indices, next Tuesday.
 

USD

AUDUSD continues to test 26-month lows, opening at 0.6217 on expectations the Greenback would be boosted next year by policies from the incoming Trump administration that are expected to boost growth and lift inflation. Holiday trading conditions prevailed with Wall Street closing flat. A relatively quiet week for the USD. Next week, there are a few mid-tier releases as weel as the major ISM Manufacturing PMI, next Friday evening.
 

EUR

AUDEUR opens at 0.5967, the lowest point since August, as the AUD remains dragged by global risk sentiment, a somewhat dovish RBA and ongoing concerns surrounding China's economic health. The DAX and CAC ended Xmas Eve -0.2% and +0.1% respectively. There has been no Eurozone data since Monday (German import prices increased +0.9% month-on-month), and nothing of note until Monday evening's mid-tier Spanish Flash CPI y/y, previously at 2.4%.
 

GBP

A quiet week for the Pound with AUDGBP remaining near recent lows, kicking of the day at 0.4957. The FTSE ended Xmas Eve +0.4%. We're still awaiting the tentative release of the Bank of England's Quarterly Bulletin. No economic data ahead of the Nationwide HPI m/m, next Thursday.
 

NZD
AUDNZD opens flat at 1.1052. There's been zero Kiwi data this week and nothing set for release next week either.