Currency Update - Monday 18th March 2019
AUD
The AUD had a volatile week last week, the back end of the week proved the Aussie is a well bid currency with a second attempt at the 0.71 level and a second failure to break through. Despite the risk events the AUD has held on well, US markets were buoyed to close out the week with the tech sector really charging forward; the Nasdaq closed 3.8% higher for the week and we should see an upbeat open for the ASX today. Chinese data on Friday did little to the AUD, Home Prices declined to 0.53% from the prior 0.61% but Foreign Investment expanded by 1.8%. We have a quiet start to the week today with little in the way of data ahead of the release of the RBA minutes from their latest meeting tomorrow; any dovish tilt here will see the AUD sold off as investors look to anticipate the timing of an interest rate cut. Thursday will see the local employment numbers , a sector the RBA have been positive on of late, should the unemployment rate climb then we can expect AUD downward pressure. Levels remain intact, 0.71 is resistance then 0.7150 should we break through. 0.70 remains the major support.
USD
The big dollar is slightly weaker after the weekend close, in DXY terms the decline is 0.24% and the DXY has broken below an important level at 96.50 so we could see some further down side to get things started. On the Equity front though US markets were full steam ahead, managing their best week for 2019 thus far, the Nasdaq almost 4% higher on the week and dragging other markets along for the ride. The Michigan Uni. Sentiment survey was solid at 97.8 vs a forecasted 95.6 but Industrial and Manufacturing Production both missed their marks, Manufacturing was a shocker at -0.5% vs +0.2% aiding in the decline of the Greenback. We have the FOMC later in the week to look forward to with only Factory Orders and Durable Goods Orders prior. The FEDS comments will be scrutinized as ever, investors looking for clarification on the balance sheet normalization and any adjustment to the dot plot and rate projections.
EUR
AUD/EUR opens marginally higher this morning at 0.6254. Both EU Headline & Core Inflation matched expectations YoY, keeping the Euro elevated against the USD at 1.1322. European equities rallied (0.6-1%) as risk sentiment was elevated, better news out of Italy where Industrial Sales grew by 0.6% and Industrial Orders were higher at 1.8% assisting stocks higher. Otherwise it was generally a weekend of currencies sitting within their recent range. The RBA release the minutes from their latest monetary policy meeting tomorrow, local employment figures on Thursday will be important for direction also.
GBP
The Pound put in a strong performance last week, opening up at 0.5327 against the AUD and 1.33 v's USD. The prospects of May pulling together a parliamentary majority, as she takes one more crack at securing a withdrawl deal before the end of March are improving. The EU now have European elections to concenr themselves with. Otherwise the EU looks set to grant an extension to Article50 before the end of the month. Brexit headlines slowed over the weekend however, the Pound however generally well bid, with expectations for further gains if an extension is granted. The BOE are in action on Thursday this week, before that we get wages data, CPI and Retail Sales. All in all it's a very busy week for the Pound, so expect plenty of volatility (v USD for the most part). Sterling moves will be Brexit driven, with a vote scheduled on Wednesday.
NZD
The Kiwi took advantage of USD weakness last week, up at 0.6850 this morning and 1.0340 againsrt the AUD. The Kiwi rallied to 1.0290, possibly a sign there of further Kiwi strength as the long-term range is tested. Westpac release their Consumer Sentiment Survey tomorrow morning, we also have a dairy auction and Current Account figures on Tuesday, followed by Quarterly GDP on Thursday.
Today’s data
USD:
Housing Market Index
EUR:
Jan Trade Balance
GBP:
March House Prices