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Aussie steady ahead of RBA minutes

By Brett Ottawa

The Australian Dollar fell forty basis points from yesterday’s high of 0.7890, running out of steam in its rally up to the 79 cent handle. Opening initially at 0.7880, the Aussie was steady throughout the domestic trading session as Chinese Inflation numbers came in at expectations of 1.6% for the month of September. The eventual decline was seen in overnight trading with a small movement higher for the greenback with the AUD/USD dropping to an eventual low of 0.7842 at the close. The dollar is expected to see further movement this morning with the release of October’s Monetary Policy Meeting Minutes whereby the RBA kept benchmark interest rates on hold at 1.5%. The Australian Dollar is currently swapping hands at the rate of 0.7850 against its American counterpart this morning.

The New Zealand dollar maintained a tight trading band throughout Monday see-sawing amid a 30-point range in the absence of headline data events. The Kiwi held onto gains won into last weeks close having pushed back through 0.7150 on softer than expected U.S inflation indicators. With little domestic data on hand to start the week attentions remained squarely with Winston Peters as an announcement of a new coalition government appears imminent. We expect a short term correction and knee jerk response from markets when a decision is finally agreed while the long term impact will largely be overshadowed by diverging monetary policy outlooks and broader global forces. The NZD opens this morning buying 0.7173 U. S cents.

The Great British Pound moved marginally lower against the US Dollar through trade on Monday moving back through 1.33 and touching intraday lows at 1.3229. Having maintained a tight trading band throughout much of the Australasian trading session Sterling came under pressures on calls Brexit negotiations could break down. Suggestions Theresa May will be unlikely to succumb to new concessions when divorce talks resume this week forced investors to trim long positions. The market has become highly sensitive to Brexit commentary and we are seeing see sawing trades backed by knee-jerk reactions to media headlines. The uncertainty that surrounds Britain’s European separation has divided market expectations and sees investors scrambling to get ahead of broader market moves as any news hits the wires. Attentions remain with ongoing divorce negotiations while the macroeconomic docket is headlined by an all-important CPI read. A strong print at or above 3% could encourage a GBP rally as the likelihood of a November BoE rate hike increases. 

A quiet day yesterday on the macroeconomic data front in the United States with the only release US Empire State Manufacturing Survey for the month of October. The result climbed six points unexpectedly rising from 24.4 to 30.2 in October, versus 20.4 expected, its highest in over three years. The US Dollar has opened generally lower against most of its major rivals today currently trading at 1.1797 against the Euro and 1.3250 against the British Pound. All attentions will now turn to tonight’s monthly UK inflation data.