• AUD higher on stronger Chinese yuan
    on October 2, 2020 at 12:00 am

    AUD - Australian Dollar The overnight session saw the Australian dollar initially break through the 0.7200 handle to touch intraday highs of 0.7209, before retreating to levels around 0.7175 during trade. The New Zealand dollar was the best performer on the day as it rose from 0.6620 to 0.6657, which saw the AUD/NZD cross fall about 50 points to 1.0800. With US economic data mixed and only modest gains in global equities, the AUD and NZD strength overnight is being attributed to a stronger Chinese yuan. With the Chinese economy faring much better than the US and Europe in response to COVID-19, the CNY had its best quarter in 12 years in Q3 and continued its ascent by rising 0.4% against the greenback overnight. Looking to the day ahead we have domestic retail sales data and consumer confidence data from across the pond. We then look offshore to euro area CPI data, which is expected to show a modest recovery before rounding out the session with US labor market data. AUD/USD traders will be looking at 0.7200, as the next level of resistance after overnight moves. A break through this level could open up moves to 0.7230 and above. Key Movers With mixed US economic data and zero progress on the US fiscal stimulus package, the USD index finished the session slightly lower. EUR/USD was able to rise from 1.1720 to 1.1770, with USD/JPY also rising from 105.45 to 105.75. As we touched on above, USD/CNY rose 0.4% to continue its ascent, and took the AUD and NZD along with it. The European commission commenced its legal proceedings against the UK overnight. The proceedings against the UK are centered around Prime Minister Boris Johnson’s plan to override core parts of the UK’s withdrawal agreement from the Eurozone. The GBP initially fell sharply on the news, however it only finished down 0.2% on the day, despite displaying a wide trading range between 1.2820 and 1.2980. Expected Ranges AUD/USD: 0.7120 - 0.7230 ▲AUD/EUR: 0.6050 - 0.6190 ▲GBP/AUD: 1.7850– 1.8020 ▼AUD/NZD: 1.0740 - 1.0850 ▼AUD/CAD: 0.9470 - 0.9600 ▼

  • Aussie follows equities higher following positive US data
    on October 1, 2020 at 12:00 am

    AUD - Australian Dollar The overnight session saw the AUD rise from 0.7100 to 0.7174 against its US counterpart as US equity markets rose. US equities were bolstered by stronger than expected economic data out of the US, coupled with increased hopes that US lawmakers would soon agree to a long-awaited fiscal stimulus package. This saw positive sentiment envelop markets, supporting global equities and risky currencies such as the AUD and NZD. Despite the NZD also rising from 0.6570 to 0.6625, the AUD/NZD cross managed to rise 50 points to 1.0850. Looking to the day ahead we can expect to a ‘pre budget address’ from Prime Minister Morrison and some second-tier data in the form the AIG PMI and CoreLogic home value index reads for September. Traders will then shift their attention to the Eurozone where the unemployment rate is expected to increase from 7.9% to 8.1% for August. The day will then be rounded out by US initial jobless claims data which is expected to remain elevated. We see initial downside support around the 0.7110 handle before the key 0.7000 level whilst on the topside, we expect upside moves to meet initial resistance approaching 0.7230. Key Movers Markets fear of an uncertain election result were confirmed during the first of three presidential debates yesterday. The debate has been widely described as a ‘train wreck’, which saw the two candidates engage in a 90-minute shout-fest. Markets were firmly in ‘risk off’ territory after the debate however things turned around as a stream of positive US data releases filtered through. As we touched on above, risky currencies benefited most as sentiment shifted, with the AUD and NZD being core beneficiaries. We also saw EUR/USD trade between 1.1687 and 1.1751 whilst the USD/JPY traded in a tight behand between 105.40 and 105.75. In commodity markets, spot iron ore rose 3.8% to touch $123.45 during trade while gold and oil futures fell modestly at 0.4% and 0.5% respectively. Expected Ranges AUD/USD: 0.7110 - 0.7230 ▲ AUD/EUR: 0.6050 - 0.6190 ▲ GBP/AUD: 1.7980– 1.8160 ▼ AUD/NZD: 1.0780 - 1.0850 ▲ AUD/CAD: 0.9470 - 0.9600 ▲

  • AUD pushes back through 0.71 ahead of Presidential Debate
    on September 30, 2020 at 12:00 am

    AUD - Australian Dollar The Australian dollar crept higher through trade on Tuesday, extending back through 0.71 US cents. Having maintained a narrow trading bound throughout the domestic session the AUD broke resistance at 0.7090 as investors capitalised on recent US gains and squared positions leading into the first Presidential debate. The AUD found added support in improved market sentiment as an uptick in US consumer confidence numbers helped bolster investors' demand for risk driving equities higher and dragging the AUD to intraday highs of 0.7140. Attentions remain squarely affixed to risk and the upcoming Presidential debate in shaping short term direction. With so much political uncertainty and two candidates spruiking vastly different economic and political agenda’s the outcome of this election will shape investors' risk profile. Having bounced off supports at 0.7030 we expect the AUD will continue to trade between last week’s low and highs approaching 0.72/0.7250 leading into next week's RBA policy announcement. Key Movers The US dollar gave up recent gains through trade on Tuesday, drifting off near two-month highs as investors adjust position leading into the first debate in the race for the White House. Having enjoyed renewed demand through the last 2 weeks investors squared positions, capitalising on recent gains amid improvements in demand for risk. The two candidates are polar opposites pushing vastly different agenda’s and investors will be keenly attached to the prospects of both Biden and Trump. While investors sit back ahead of the debate improvements in broader market sentiment added further pressure on the world’s base currency. An uptick in domestic consumer confidence and a suggestion that a fiscal coronavirus aid package could be agreed by the end of the week helped fuel demand for risk, driving equities higher. The Dollar’s correlation with equity performance remains strong as sentiment continues to ebb and flow. With risk continuing to steer direction there is scope for added US upside leading into the election as shorts remain near decade highs. The Pound gave up gains hard won through trade on Monday, following commentary for Bank of England Governor Andrew Bailey. Bailey warned the recovery may wane as new restrictions rob the rebound of momentum, hinting that a move to negative interest rates was not off the table. Britain suffered the largest hit to GDP production of any major economy through Q2 and is expected to remain near 10% weaker through Q3. Having given up moves above 1.29 sterling fell to 1.2836 before edging higher into this morning's open. Expected Ranges AUD/USD: 0.7030 - 0.7230 ▲AUD/EUR: 0.6010 - 0.6090 ▲GBP/AUD: 1.7880 - 1.8220 ▼AUD/NZD: 1.0750 - 1.0850 ▲AUD/CAD: 0.9450 - 0.9590 ▲

  • AUD downturn stalls amid improved demand for risk
    on September 29, 2020 at 12:00 am

    AUD - Australian Dollar The Australian dollar crept upward through trade on Monday, supported by improved risk sentiment led by a rally across equity markets. With little domestic data on hand to drive direction the AUD maintained a narrow trading band throughout the local session bouncing off support at 0.7030 yet struggling to extend beyond 0.7050. While moves remained largely muted overnight commodity and growth led currencies found some support amid improved appetite for risk after equities and US stock jumped 1%, halting a four-week decline. Attentions this week remain with the overall risk narrative as investors continue to adjust growth expectations and position ahead of a host of uncertainties leading into year end. Focus today shifts to the first US Presidential debate, a key marker in assessing both candidates and determining momentum as we move toward the November election. With the AUD supported on moves approaching 0.70 we will be watching the debate and a host of key US data sets as key markers driving demand for risk leading into next weeks RBA policy meeting. With ample room for the US dollar to continue its rebound a souring in risk demand could see the AUD track lower and find itself again trading between 0.68 and 0.70 US cents. Key Movers Safe Haven currencies underperformed through trade on Monday as improved demand for risk helped equities buck the four week downturn, finding upward momentum amid hopes talks between democrats and the White House may still lead to renewed programs of fiscal support ahead of the election. The USD and JPY both fell with the dollar giving up near two month highs, down three tenths of a percent on the day. The Euro edged upward yet still struggles to regain the upward momentum that saw it test 1.20, trading between 1.1620 and 1.1680. Sterling found support Monday, outperforming major counterparts amid hopes resumed Brexit negotiations will lead to at least some form of exit plan that avoids the UK falling off the proverbial economic cliff. Talks resumed Monday and while officials warned a deal was some way off optimism across markets as comments from EU official suggested the mood was improved and compromises on key sticking points, particularly fisheries, could be agreed in time to secure a plan ahead of the October 15 deadline. Breaking through 1.29 to touch 1.2925 attentions remain squarely affixed to headlines as they emerge. Any sign a deal will be brokered will be Sterling positive and likely drive a run back toward and through the psychological 1.30 barrier. Expected Ranges AUD/USD: 0.6930 - 0.7130 ▲ AUD/EUR: 0.6010 - 0.6090 ▼ GBP/AUD: 1.7980 - 1.8420 ▲ AUD/NZD: 1.0730 - 1.0850 ▲ AUD/CAD: 0.9420 - 0.9490 ▲

  • Aussie weaker on Risk, RBA
    on September 28, 2020 at 12:00 am

    AUD - Australian Dollar Last week saw the Australian Dollar fall approximately 3.5% against its US counterpart. Having started the week around the 0.73 handle, we now see AUD/USD trading closer to 0.70 as we head into this week. Although the NZD also fell over 3%, AUD/NZD fell nearly 0.5% throughout the week and is now trading below the key 1.08 handle. Although a lot of the move can be attributed to weaker risk sentiment and broad-based USD strength, the Australian Dollar was seemingly weighed down by rising expectations that the Reserve Bank of Australia will ease monetary policy further at the next meeting. The data docket is light to start out the week with not much to move markets. We will see Chinese manufacturing data later on in the week as well as the key US non-farm payrolls read on Friday which will both be watched closely. Downside AUD/USD momentum could see supports at 0.70 tested this week. Key Movers The US Dollar index eked out a two-month high on Friday as broad based USD strength was embraced by markets. With the index rising 0.3% on the day, USD/EUR fell to a two-month low of 1.1612, USD/JPY rose to 105.70 and as we touched on above, the AUD and NZD were also lower. In Trump-Land, the president put forward Coney Barrett as his nomination for the supreme court however given this was widely expected, market reaction is expected to be muted as markets open. There was also further comment regarding the long-awaited fiscal stimulus package in the US with House Speaker Pelosi indicating that a deal was a ‘good chance’ of being agreed. Expected Ranges AUD/USD: 0.6980 - 0.7090 ▼ AUD/EUR: 0.6000 - 0.6110 ▼ GBP/AUD: 1.8000– 1.8200 ▲ AUD/NZD: 1.0700 - 1.0850 ▼ AUD/CAD: 0.9380 - 0.9495 ▼

  • Weekly market wrap-up
    on April 29, 2019 at 12:00 am

    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.