AUD - Australian Dollar
The Australian dollar was steady to start the week following a poor retail sales print for the month of September. Opening the week at 0.6913, we saw overnight lows of 0.6877 as retail sales recorded a 0.2% increase against forecasts of 0.4%. Consumers continue to dial back spending despite multiple interest rate cuts this year.
The annual Melbourne Cup rate decision is on the agenda this afternoon whereby it is widely expected that the RBA will keep interest rates on hold today at benchmark lows of 0.75%. Any hopes of a further cut were diminished last week when year on year annual inflation expectations came in below long-term target bands of 2-3%. Markets are currently pricing a 5% chance of a cut today while pricing has pulled back to a 50% chance by February 2020.
The Australian dollar opens this morning at 0.6882. We expect support levels to hold on moves approaching 0.6840, while any upward push will likely meet resistance at 0.6930.
Trade talks between the United States and China came back in force overnight as a deal continues to be dangled in front of global markets on optimism that an agreement could be signed by the end of November. Furthermore, a trade breakthrough in Asia-Pacific between 16 countries in the Regional Comprehensive Economic Partnership (RCEP) looks to be close to sign off by 2020 after seven years in the making despite India pulling out.
The US Dollar Index (DXY) which measures a basket of currencies against the greenback rose 0.43% to 97.54 on the day as higher US yields on both 10-year treasury notes and 30-year bonds support the worlds most traded currency.
The EUR/USD shifted lower overnight ahead of incoming ECB President Lagarde’s first speech this morning. The pair slipped from 1.1173 to lows this morning of 1.1127 as markets positioned themselves for hints of a change monetary policy from her predecessor Mario Draghi. Lagarde though avoided the topic at the award ceremony the President attended and called for “strength, resolve and courage” for the Eurozone.
0.6840 - 0.6930 ▼GBP/AUD:
1.8600 - 1.9000 ▲AUD/NZD:
1.0720 - 1.0820 ▲AUD/EUR:
0.6150 - 0.6210 ▼AUD/CAD:
0.9000 - 0.9080 ▼