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Aussie moves lower as a Trade War resolution looks more and more distant

AUD - Australian Dollar

The Australia dollar was whittled lower overnight as skepticism on Trumps reported weekend phone conversation with China entered the market. Opening this morning at 0.6753, the risk-aligned Australian dollar started the session in a buoyant mood, trading as high as 0.6780 before unwinding any optimism throughout the day. Initially buoyed by reports from Trump that US and Chinese officials spoke over the weekend, the Aussie followed equity and bond markets higher, challenging resistance at 0.68. This was however, emphatically debunked by Chinese officials with the Ministry of Finance, in particular saying they had not heard of this phone conversation taking place which saw risk sentiment turn and the Kiwi sold lower.

Moving into Wednesday, the Aussie looks to enjoy a relatively quiet day on the economic calendar with only a report on Construction Work Done to look forward to. Otherwise, there isn’t too much off-shore releases to drive momentum either but as always, the market will keep a close eye on the Trade War.

Key Movers

The Great British Pound was the clear best performer overnight as optimism that a no-deal Brexit might be averted gained traction. The Sterling gained 0.6% to hit 1.23 against the Greenback, its highest point in a month. The Guardian reported that the UK and EU might still find a way forward as EU officials mentioned they are willing to listen to realistic proposals on the Irish backstop. Whether Prime Minister Johnson can come up with a solution is another matter but the market nevertheless reacted positively to signs that the door to a orderly divorce a still ajar. On the other side of Parliament, Jeremy Corbyn met with opposition parties to determine a path to avoid a no-deal Brexit. The BBC reports that anti-Brexit MP’s are planning to apply for an emergency debate as soon as next week.

Also finding its way higher was the Japanese Yen which traded upwards on the risk-off tone in global markets. Moving 0.3% higher, to open this morning at 105.78 and be the second best performer for the day.

Expected Ranges

AUD/CAD: 0.8922 - 0.8999 ▼

AUD/EUR: 0.6046 - 0.6116 ▼

GBP/AUD: 1.8156 - 0.8239 ▲

AUD/NZD: 1.0581 - 1.0648 ▲

AUD/USD: 0.6712 - 0.6791 ▼