Currency Update - Monday 26th March 2019
AUD
A slight turnaround in sentiment and some support for oil and Gold gave the CRB a boost and put the index back in the black, albeit only slightly with gains of a mere 0.08%. The big dollar was offered and gave the AUD back some of the recent lost ground, allowing our local unit to once again reclaim the 0.71 handle. Traders remain skittish though and Gold has benefited, rising to highs for the month, data wise there was little in the way of key notes but surprisingly upbeat numbers from Germany provided some relief. Equities remain under pressure, the Nikkei was smashed lower to the tune of 3% but European losses were more modest, the ASX did not escape the route and lost a little over 1% on the opening day of the week. Kiwi data to print this morning, nothing locally and a quiet week ahead sets the tone for sentiment and headlines to dictate moves. Brexit headlines had the GBP in full swing overnight and will no doubt be a major driver of general sentiment this week. AUD/USD opens once again just above the 0.71 mark, 0.7150 will be a tough nut to crack and support should be found at 0.7080 then 0.7050.
USD
The greenback was offered overnight on more dovish rhetoric from the FED, after the FED halted their drive to tighten policy last week with no further rate hikes projected for 2019 the USD is feeling the pinch. Overnight comments from FED member Evans (Hawk), stating that inflation could go to 2.5% before any further hikes are needed did little to increase trader confidence. The FEDs Harker (centrist) though did say he sees one rate hike this year, clarifying though “one at most”, the abrupt turnaround by the central bank has seen many question their USD positions and given the AUD some room to breathe. The Chicago FED National index printed, poorly at -0.29 vs -0.38 forecast and declining from the previous read, the Dallas FED Manufacturing Index also negative at 8.3 vs 8.9 forecast and declining from previous 13.1. The Greenback has capitulated and if Asian equities make some gains today the AUD could push on. Housing Starts, Building Permits and House Price Index to come tonight ahead of Consumer Confidence in the early hours.
EUR
German data has been a concern of late but overnight the largest economy in the Eurozone provided the catalyst for the single currency recovery, EUR/USD pushed to highs of 1.1325 on the release of German IFO survey data. Business Climate printed at 99.6 vs forecast of 98.5, Expectations at 95.6 vs 93.8 and Current Assessment came in at 103.8 vs 103.4, all three releases were an improvement on their priors. The release buoyed the single currency but not Euro equities, which were a sea of red at the close although the losses were minor compared to the last week’s close. German Consumer Confidence to come this evening as well as the French GDP, Brexit headlines continue to spike volatility and ‘Super’ Mario will speak in Frankfurt on Wednesday evening our time.
GBP
Brexit continues to drive direction for the GBP, an overnight roller coaster ride can be seen on the charts, correlating with media releases. Initially the BBC reported an upbeat chance of a third meaningful vote passing through parliament driving GBP higher, these gains were soon given back though when the DUP stated there was no change to their standpoint. PM May also later confirmed there was little in the way of support for a third vote and down went the Pound. The pattern of headlines and volatility continued throughout the day as PM May had various meetings and speculation was abound. European leaders announced they are prepared for a no deal but May stated this was no longer “viable” and there was not enough support for her deal “yet” or “as things stand” the standoff continues. BBA Loans For House Purchase to print tonight but likely this will be widely ignored in favour of Brexit news and political standoffs.
NZD
Kiwi Trade Balance has printed this morning and the headline number was 12M against a forecast of -200m, Exports increased to 4.82b vs 4.7b forecast and Imports declined to 4.8b vs 4.9b, providing some support for the Kiwi dollar. Overnight, much like the AUD the Kiwi took advantage of a weakened USD and made gains to hit 0.6918. Tomorrow's RBNZ the major print for the week. No move is expected but comments will be closely scrutinized.
Today’s data
AUD:
No Data
USD:
Housing Starts, Building Permits, House Price Index, Consumer Confidence Index
EUR:
German GfK Consumer Confidence, French Gross Domestic Product
GBP:
BBA Loans for House Purchase
NZD:
NZD Trade Balance