Currency Update - Wednesday 19th June 2019
AUD
The AUD traded at a low of of 0.6832 overnight as the RBA made it clear in their Monetary Policy Meeting that further rate cuts are coming. The quarterly HPI data, which measures the change in the selling price of homes in Australia's capital cities fell 3%, below expectations of -2.5%. The AUD was helped overnight by President Trump and Xi agreeing to meet at the G20 meetings this weekend. Risk caught a bid, with global stock markets liking the news and rallying extensively. The ASX will open at fresh multi-year highs this morning. Tonight's Federal Reserve meeting is the highlight of the data calendar this week, most expect the Fed to prepare markets for a rate cut later in the year. Iron Ore bounced 4% supporting the AUD, oil was also up 4%. Support still remains at 0.6830, resistance at 0.69 & 0.6950.
USD
The USD made gains against the majors overnight, Eurodollar falling below 1.12, the Pound was heavy also reaching lows of 1.2511 before recovering. U.S Housing Starts fell by 0.9% for May (0.3% exp), Building Permits data marginally beat expectations. President Trump was on Twitter saying that he had had a very good telephone converation with President Xi and that they both agreed to hold an extended meeting at the G20. This lit a fire under stocks with the S&P up 1%, the Nasdaq gained 1.4%. ECB President announced that if the European economic outlook does not improve, then more stimulus will be required. This bent Trump out of place, who again turned to Twitter telling his followers that Draghi 'is making it unfairly easier for Europe to compete against the USA'. Tariffs? Focus is now squarely on tonight's FOMC meeting, Powell's conference and dot plot chart. Monetary settings are expected to remain on hold, with the Fed preparing markets for rate cuts over the coming months.
EUR
European Final CPI and Core CPI printed as expected overnight, the big news came from ECB President Draghi, who announced that further stimulus would be required if the European economy does not improve. This would likely be achieved by reducing interest rates further, the Euro fell in the aftermath sub 1.12. Europan stocks punched higher, closing with gains of between 0.6% and 2%. It is fair to say Draghi's announcement should weigh on Euro value over the coming months and is likely supportive of positive stock price movement. No European data to be released this evening.
GBP
The AUD opens 0.2% higher against the Pound this morning, GBP/USD also higher. The second round of votes saw Boris as the clear favourite to become the new Conservative party leader. It remains to be seen whether he can win fresh concessions from Europe and whether his own party will ultimately vote against him in a vote of confidence if he leads the U.K closer to a no-deal Brexit. May CPI is released this evening.
NZD
The Kiwi bounced oto 0.6483 aopes at 0.6525 against the USD morning. The Kiwi still looks weak as USD appeal improves, the DXY opening at 97.63 this morning. The Kiwi Current Account Balance bounced to $0.68bn ($0.16bn exp) this morning. The FOMC are in action tonight, the biggest event in the data Calendar for the month.
Today’s data
USD:
FOMC Rate Decision, Powell Press Conference
GBP:
May CPI
NZD:
Q1 Current Account Balance