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AUD - Australian Dollar

The Australian Dollar has closed last week higher breaking out of the 67c – 68c range vs the Greenback, in the last few hours of the trading week the AUD/USD launched higher to clear the trendline resistance level and close on Friday at 0.6856. The main driving force behind the rally was Greenback weakness against most major currencies as hopes a Brexit deal will help mitigate risks of a recession within the EU trading bloc.

Locally, we saw the RBA Governor Lowe speak at the International Monetary Fund in Washington where he commented that it was "extraordinarily unlikely” that the economy will need to be stimulated by cutting interest rates into negative territory. He also added, there is a high risk that the main effect of lower interest rates will be to push up prices of existing assets rather than stimulate investment in new assets. These comments had little impact on the Aussie but did however spark tweets by some economists on the RBA’s policy saying that low interest rates are ineffective for growing true GDP growth.

The economic calendar is very light today but Brexit headlines should keep everybody busy. From a technical perspective, the AUD/USD pair is currently trading at 0.6845 and we continue to see immediate support at 0.6800, a sustained move under this could lead to 0.6760. On the flip side, resistance is seen at 0.6890 followed by 0.7000.

Key Movers

It was a quiet on the macro front with no releases in the U.S scheduled, the U.S Dollar took direction mostly from offshore events which saw weakness on the DXY and close at 97.14, a level not witnessed since early August. Traders remained cautious after Chinese GDP data showed the negative impact the US-China trade war has had on China. We were predicting a slowdown of GDP in Q3 from 6.2 percent to 6.1 percent year-on-year with the actual number contracting further to 6.0 percent as additional tariffs put a leash on growth. The US–China trade war is clearly hampering the economy with exports contracting 0.4% as the U.S. began imposing an additional 15% tariff on $110 billion worth of consumer goods from Sept 1st. Imports declined 6.5% for the quarter. EUR/USD rallied to a near two-month high of 1.1169 while the USD/JPY cross-rate dropped to 108.38.

Meanwhile, in the UK, most of the Britain waited for more updates on Brexit. British MP’s voted over the weekend to postpone a decision on whether to back Prime Minister Boris Johnson’s Brexit deal with the EU. Some lawmakers fear, if the deal passes the legislation to implement it might not be ready by October 31, the date the U.K. would be scheduled to leave the EU. They say there is a possibility the U.K. could be forced to exit the European Union "on no-deal terms." The GBP/USD cross-rate closed the week at 5-month highs at 1.2973.
The UK parliament is voting today on the new Withdrawal Agreement as agreed between the UK government and the European Union.

Expected Ranges

AUD/USD: 0.6780 - 0.6900 ▼

GBP/AUD: 1.8670 - 1.9200 ▲

AUD/NZD: 1.0680 - 1.0790 ▼

AUD/EUR: 0.6090 - 0.6180 ▲

AUD/CAD: 0.8920 - 0.9040 ▲

AUD - Australian Dollar

The Australian Dollar witnessed a push higher on Thursday on the back of a bullish jobs report for September. Having opened the day at 0.6758, the AUD/USD pair spiked to an intraday high of 0.6791 as Australia’s unemployment rate fell unexpectedly to 5.2 percent. The numbers were an improvement on the previous month and with the RBA’s main priority being the labour market and in particular the unemployment rate it was enough for the market to reduce the chance of another imminent rate cut by the RBA next month in November. It is still important to note that the numbers are well above the RBA’s target range of 4.5 percent and the RBA has said “an extended period of low interest rates will be required in Australia to reach full employment and achieve the inflation target”.

Meanwhile, overnight the Australian Dollar witnessed a further rally pushing through 68c to a high of 0.6833 against the Greenback with Brexit developments being the key driver. Opening this morning at 0.6822, we see initial support at 0.6800 followed by 0.6760. The market faces near term resistance at 0.6850 followed by 0.6890.

Looking ahead, the domestic docket will see the RBA Governor Low deliver a speech today at the International Monetary Fund. Also, all eyes will be on China’s GDP figures where economist are predicting a further slowdown in the third quarter from 6.2 percent to 6.1 percent year-on-year. Any deeper contraction would raise concerns about the Chinese economy which might have an affect on the Aussie.

Key Movers

The US Dollar saw deterioration overnight against the Pound as reports that the UK and EU had agreed to a new deal ahead of the EU summit. The GBP/USD reached 3 month highs of 1.2989 on the back of the Brexit news. Focus now lies on Saturday where the MPs will vote to whether they back the new deal or not. The Euro had similar sentiment, where we saw a 2% increase in the EUR/USD touching a high of 1.1139 following Brexit news. The overnight developments highlights the importance of Brexit and subsequently the impact optimism can have on the GBP and EUR.

Meanwhile, on the data front, UK retail sales softened as British shoppers were more cautious of their spending in the three months to September as raising concerns about the health of the economy in the run-up to Brexit. Looking at the third quarter as a whole, which strips out monthly volatility, quarterly sales growth held steady at 0.6 percent while the annual pace of expansion dropped to 3.1 percent from 3.6 percent in the second quarter, the weakest since the late 2018. Over in the U.S, Federal Reserve business activity fell to 5.6 in October from 12 in September. Economists surveyed the reading at 7.1, any reading above 0 indicates improving conditions.

Expected Ranges

AUD/USD: 0.6760 - 0.6890 ▲

GBP/AUD: 1.8650 - 1.9200 ▲

AUD/NZD: 1.0690 - 1.0800 ▲

AUD/EUR: 0.6080 - 0.6170 ▲

AUD/CAD: 0.8900 - 0.9020 ▲

AUD - Australian Dollar

The Australian dollar was again under pressure during the Asian trading session as a lack of concrete information around a partial trade deal between United States and China filtered through to global markets. Opening Wednesday morning at 0.6757, intraday lows of 0.6725 were seen as uncertainty as to actual agricultural purchases by China and the agreed returns by the United States remain unclear.

MI Leading index, which measures nine economic indicators by the Melbourne Institute, came in at -0.1% with the main factors in the headline number include a deterioration in consumer sentiment and commodity prices.

Despite overnight lows reaching 0.6723, the AUD/USD cross paired all losses following disappointing retail sales in the United States causing a drop in the greenback.

The Australian dollar is currently trading at 0.6758. We expect support levels to hold on moves approaching 0.6720, while any upward push will likely meet resistance at 68 US cents.

Key Movers

The US dollar saw a deterioration overnight as Retail Sales saw its first drop in seven months. A reading of -0.3% for the month of September grossly missed market expectations of an increase of 0.3% as interest rate cuts in the United States have yet filtered through to consumer spending.

Should economic indicators continue to show weakness you would expect the Federal Reserve to cut rates for a third consecutive meeting on October 30th. Markets quickly increased their expectations of a 25bps cut following the Retail Sales release from 73.8% to 87.1% based on the CME Fedwatch Tool. The US Dollar Index (DXY) which measures the greenback against a basket of currencies closed 0.3% lower to test the 98.00.

Cable continued its rally overnight in hopes of a Brexit deal as talks between UK and EU officials resumed in Brussels. With the deadline of October 31 quickly approaching, the Great British Pound saw heightened volatility not seen since the 2016 June referendum. GBP/USD hit a five-month high overnight of 1.2877 with markets hanging onto any news as negotiators enter into their final days of talks.

Today we see employment figures due for release this morning in Australia and UK Retail Sales is likely to get some attention this evening. Brexit discussions continue to be the main theme at this weeks EU summit.

Expected Ranges

AUD/USD: 0.6720 - 0.6800 ▲

GBP/AUD: 1.8700 - 1.9200 ▲

AUD/NZD: 1.0690 - 1.0800 ▲

AUD/EUR: 0.6060 - 0.6140 ▼

AUD/CAD: 0.8880 - 0.9000 ▲

AUD - Australian Dollar

The Australian Dollar was whittled approximately 0.3% lower overnight, opening this morning at the marginally lower level of 0.6757. As has been the norm for some time, the Aussie continues to trade on domestic issues and US-China relations which both soured slightly during the Tuesday trading session.

Kicking things off at home, the RBA released their meeting minutes which ultimately reiterated the dovish stance of the RBA. Noting that they are 'prepared to ease monetary policy further if needed' and that recent data was on the soft side, the Aussie drifted lower as the chances of further rate cuts grow less nebulous. Offshore events also took its toll on the Aussie with the optics of the US-China phase one deal making way for the reality of the agreement. Lingering concerns over how much of a deal was actually agreed have muddied the Aussie’s support. Nevertheless, despite the sour tone, the Aussie did see a slight uptick as positive Brexit news reverberated around global markets and risk sentiment returned to the market.

Moving into Wednesday, the Aussie will look off-shore for direction with Brexit making waves and US retail sales also gleaning some attention.

Key Movers

Brexit dominated attentions last night as the EU and UK look surprisingly close to a draft withdrawal agreement. Prime Minister Johnson has conceded to the EU’s demands on the Irish Border and agreed in principal that the customs border can be in the Irish Sea and thus will keep Northern Ireland within the EU customs union. While the deal looks close to being agreed there is still some major hurdles before pen gets put to paper although there is considerable momentum from both sides as everyone now wants a resolution one way or another. The Great British Pound leaped more than a cent to touch 1.2780 on the news although remains considerably volatile.

For other majors, the Greenback remains relatively flat with safe haven currencies whittled lower as risk sentiment returns to the market.

Expected Ranges

AUD/CAD: 0.8872 - 0.8942 ▼

AUD/EUR: 0.6079 - 0.6149 ▼

GBP/AUD: 1.8882 - 1.8959 ▲

AUD/NZD: 1.0689 - 1.0767 ▲

AUD/USD: 0.6719 - 0.6781 ▼

AUD - Australian Dollar

The Australian dollar is weaker this morning when valued against the Greenback. The Australian dollar came under selling pressure for most of the day, reaching a daily low of 0.6751, before closing the day at 0.6770. On the release front yesterday we saw Chinese trade balance widened to $39.65 billion in September, much better than the $33.30B expected. The larger surplus, however, is the result of contracting imports, which in the mentioned period plummeted by 8.5%, while exports declined by 3.2%. Looking ahead today and the Reserve Bank of Australia will release the Minutes of its latest meeting, and the market anticipates a dovish stance, which may lead to additional downside movement in the AUD.

From a technical perspective, the AUD/USD pair is currently trading at 0.6775. We continue to expect support to hold on moves approaching 0.6730 while now any upward push will likely meet resistance around 0.6800.

Key Movers

The Greenback rose on Monday, recovering some ground against most major rivals, as optimism waned about a trade deal between the United States and China, and investors fretted about the ongoing Britain’s exit from the European Union. Regarding US-China trade tensions, both countries seem to have reached another truce and be heading into a deal, although negotiations are set to continue after this “phase one” announced by US President Donald Trump.

The Pound sterling is weaker this morning when valued against the Greenback finishing the day at around 1.2560, having fallen to a daily low of 1.2515. Brexit-related headlines kept weighing on sterling reports suggesting that EU representatives fear that British Prime Minister Boris Johnson won’t be able to pass Brexit in Parliament (October, 31). On the data front today in the UK we will see the release of its latest employment data. The ILO Unemployment Rate is seen stable at 3.8%, while the September Claimant Count Change is expected at 27.9K vs the previous 28.2K. From a technical perspective, the GBP/USD pair is currently trading at 1.2568. We continue to expect support to hold on moves approaching 1.2515 while now any upward push will likely meet resistance around 1.2600.

Expected Ranges

AUD/USD: 0.6675 - 0.6775 ▼

GBP/AUD: 1.8450 - 1.8650 ▼

AUD/NZD: 1.0650 - 1.0850 ▲

AUD/EUR: 0.6050 - 0.6250 ▼

AUD/CAD: 0.8850 - 0.9050 ▲

Australian Consumer Price Index for Q1/19 came in weaker than expected, falling well below the RBA’s 2-3% target range. The AUD dropped temporarily below the important 0.70 level but then managed to bounce back. The pace of inflation has weakened noticeably which is adding to the case for easier monetary policy. This is making the RBA meeting on the 7th May and RBA Statement on Monetary Policy on the 10th a lively event to keep a look out for.

Oil rallied on the news that the US would not renew its oil sanction waivers that allow countries to buy Iranian oil for 5 nations which included China, India, Japan, South Korea and Turkey. Currencies of oil importing nations such as INR and TRY suffered on the headline while currencies of exporting oil nations such as CAD and NOK strengthened. On Friday, Oil futures dropped 2.9% following mixed Headlines from Russia and US leaders.

The BoC left rates unchanged at 1.75% for the fourth time, as expected, maintaining its dovish tone as the economy faces a slowdown. Their GDP outlook for 2019 dropped to 1.2% from 1.7%, and to around 2% in 2020. USDCAD spiked to 1.3522 at the release of the headline. Governor Poloz afterwards emphasised patience and reiterated that the next move in rates is likely to be a hike than a cut, which help the USDSCAD fall back below the 1.35 handle.

Strong US data propelled the Greenback to increase +0.7% versus the Euro and the Loonie, +0.6% versus the Sterling, and +1.5% versus the Aussie dollar. US domestic GDP came in at 3.2%, when the expectation was 2.6%. Additional data showed that the number of Americans filing for unemployment benefits fell to its lowest level in almost 50 years. Furthermore, the Core Durable Goods Orders rose by the most in eight months in March, showing surprising strength. The USD Index lost some ground at the end of the week as market participants realised that 1.7% of the 3.2% GDP increase came from inventory accumulation and net exports (sparked by a big -3.7% drop in imports).

Japan’s Industrial production shrank at its fastest level since 2015, slipping 0.9% on the month for March as exports slumped. This is a leading indicator for GDP which probably shrank in the first quarter. Governor Haruhiko Kuroda launched a radical program to reflate prices nine years ago, however, the BOJ now projects that it won't accomplish its 2 percent inflation target at least through March 2022. The Japanese Yen was the best performer within the major currencies last week; it rallied 0.3 percent versus the US dollar and 1.8 percent versus the Aussie dollar.

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