Aussie falls as US-China trade war continues to roil markets
Daily Currency Update
Risk sentiment soured overnight as the US-China trade war continues to roil global markets. The Australian dollar was not immune to the turn of risk sentiment either, opening this morning at 0.6727, a significant fall from the high of 0.6757 earlier in the day. Initially, the Aussie was buoyant with a steady incline upwards as the Tuesday session progressed. Coming back from their holiday, Chinese markets were relatively positive with movement upwards in equity markets and the Chinese Yuan also fixing on the higher side. As the Aussie tends to do, it tracked the Chinese Yuan higher throughout the session and ended the Asian session on a high note.The positivity however came undone during the American session as bad news from the US-China trade talks filtered out throughout the day. Yesterday, China kicked things off by narrowing the scope of discussion to exclude US demands on Industrial Policy and subsidies to firms. The US Commerce Department then added fuel to the fire by banning 8 key Chinese technology firms from doing business with American firms for alleged human rights abuses against Muslim minorities. China closed the day with a Foreign Ministry spokesman warning that China will retaliate. Ultimately the news soured global sentiment as a reconciliation looks like a distant memory despite talks in Washington expected to continue on Thursday.
Moving into Wednesday, the domestic calendar looks particularly light on with only Westpac’s Consumer Sentiment to drive direction. The market will also keep a close eye on the US Federal Reserve’s speech early on Thursday morning.
Key Movers
The Great British Pound is the weakest of the major currencies overnight as it shed 0.7% to fall to 1.22 against the Greenback. The catalyst for the large losses came from a familiar source with Brexit dominating trading ahead of the EU summit. Despite the imminent summit, the deal looks to be all but dead with Germany’s Angela Merkel informing UK Prime Minister Johnson that Northern Ireland must remain part of the customs union in any withdrawal agreement. Johnson’s response was that under these circumstances, it would be effectively impossible to reach an agreement. As the two sides again look to be in a standoff, the Pound felt the brunt of the markets unhappiness with the situation.Other key movers came off the back of faltering risk sentiment with safe haven currencies enjoying a modest leg up. The usual suspect, the Swiss Franc, Japanese Yen and US Dollar, all enjoyed measured gains overnight.
Expected Ranges
- AUD/CAD: 0.8929 - 0.8996 ▼
- AUD/EUR: 0.6111 - 0.6173 ▼
- GBP/AUD: 1.8124 - 1.8188 ▼
- AUD/NZD: 1.0644 - 1.0725 ▼
- AUD/USD: 0.6699 - 0.6757 ▼