Currency Update - Wednesday 22nd May 2019
AUD
Risk assets were bid overnight as the U.S softened their stance on telecommunication companies, ie. Huawei. Stocks, iron ore, copper and the JPY rallied, whilst ASX futures open at 6502 this morning! Yesterday the RBA Governor gave the strongest indication yet that interest rates will be cut in June, markets now placing the probability at 90%. The AUD fell to a fresh low of 0.6866 overnight before making back some ground to open at 0.6885. China was stimulating again, this time reducing reserve ratio's for rural commercial banks, this helped the bid tone for stocks. The AUD is likely to remain under pressure until the first Tuesday of June when the RBA is likely to push the button on monetary policy adjustments. All of Australia's retail banks believe the RBA will cut in June, Macqaurie Bank are of the belief they will follow up with a further cut in August. Support is at 0.6850, resistance now at 0.6930.
USD
U.S Existing Home Sales were weaker than expected overnight, the USD shrugged off the latest report however, opening above 98.00 in DXY terms and placing it's own pressure on an already beleaguered AUD. U.S stocks were onto a flyer as officials temorarily halted the national security measures aimed at international telecommunication companies. Stocks closed rouoghly 1% higher, the march higher conitnues despite many retail investors sitting on the sidelines due to trade war fears. Tonight sees the release of the FOMC's Minutes, we'll gain an insight into the boards latest thinking on future rates policy.
EUR
Consumer Confidence fell by -7 (-8 exp) slightly less than expected. AUD/EUR opens marginally lower but again stuck in a tight range, Eurodollar meanwhile settled at 1.1164. European equities closed with decent gains, despite coming off their earlier highs. Tonight sees ECB President Draghi speaking in Frankfurt. Much of the same is expected here, AUD likely to remain contained towards recent lows before the RBA's likely interest rate cut in early June.
GBP
Theresa May announced that she would offer MP's a vote on whether to hold a second Brexit referendum, all part of a fourth withdrawal agreement bill that she hopes will pass through parliament. She offered further concessions on a temporary customs agreement, a legal obligation to find alternative backstop arrangements and terms that would see Northern Ireland aligned to the U.K. A customs union and brexit referendum directly opposes the conservative manifesto and with labour also pledging to vote against May's proposals the bill looks doomed to fail a fourth time. Hard Brexit anyone? The FTSE opens higher, April CPI data is released from the U.K this evening.
NZD
Headline Q1 Retail Sales marginally beat expectations by 0.1%, Core Retail Sales printed 0.2% lower however. NZD/USD clings to 0.6508 this morning, AUD/USD at 1.0578.
Today’s data
USD:
FOMC Minutes
EUR:
Draghi Speaks
GBP:
April CPI