AUD - Australian Dollar
The Australian dollar offered little to excite investors through trade on Tuesday, bouncing between intraday lows at 0.6772 and session highs at 0.6794. While the S&P enjoyed modest gains, moves across currency markets remained largely muted with little of note driving direction throughout the domestic session. Investors largely sat on the sideline ahead of commentary from RBA Governor Lowe, as the central bank head addressed attendees at the Australian Business Economists Dinner. Markets largely ignored Lowe’s comments as he reiterated his belief the RBA would not be forced to adopt unconventional tools while lowering the baseline interest rate handle wherein such policy tools would need to be considered. Lowe suggested the lower bound for interest rates actually sits at 0.25% affording the RBA two more rate cuts before quantitative easing would be contemplated.
Attentions now turn to domestic Construction data and a host of US data sets headlined by Chicago PMI manufacturing numbers and core PCE inflation data, the Fed’s preferred measure of inflation. With monetary policy expectations largely priced in leading into the end of 2019 anything short of a significant miss on the aforementioned data sets will likely mean low level volatility will continue into the end of the trading week. Volatility instead will be derived from US-China trade talk progress. Negotiators appear to be moving closer to reaching a phase one deal, while US support for Hong Kong drives a wedge between the two superpowers.
Watch supports at 0.6770 and 0.6730 with resistance on moves approaching 0.68 and 0.6830.
Broader currency markets were largely muted through trade on Tuesday as trade new headlines have little impact in the absence of any concrete evidence a deal will be struck while broader macroeconomic indicators remain steady and monetary policy movements globally appear to have stalled as central banks assess recent moves and their relative impact.
US consumer confidence data was weaker overnight , falling for the fourth consecutive month, while New home sales data was strong as low interest rates and a strengthening labour market bolstered buyer confidences. The US found further support in a surprise narrowing of the trade deficit (although some what skewed by timing of tariffs) leading to increased expectations for Q4 growth and a period of stability across Fed interest rates.
Sterling remains vulnerable to polling news ahead of the election falling as labour seemingly narrows the gap to the ruling conservatives. Down 0.3% Sterling opens at 1.2863.
0.6730 - 0.6830 ▲AUD/EUR:
0.6130 - 0.6180 ▲GBP/AUD:
1.8820 - 1.9120 ▼AUD/NZD:
1.0490 - 1.0620 ▼AUD/CAD:
0.8980 - 0.9060 ▲