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Trade Deal signing does little to inspire AUD rally

AUD - Australian Dollar

The Australian dollar edged upward through trade on Wednesday bouncing back through 0.69. Having traded between 0.6880 and 0.69 through much of the domestic session as investors preferred to waylay moves prior to phase 1 of the US/China trade deal. Demand for risk improved in the wake of the trade deal signing and confirmation the relationship between the world’s two economic superpowers is thawing. Having touched 0.6917 in the immediate aftermath the AUD edged lower as investors absorbed specifics of the trade agreement. Parts of the trade agreement have been criticised for not going far enough in protecting US interests and with underlying structural difference unresolved a complete resolution to the near three year trade war will likely continue through the year ahead weighing on potential AUD upside.

With little of note on the domestic docket today we anticipate the AUD will remain range bound and continue to bounce between 0.6870 and 0.6930 consolidating after correct lower through the first two weeks of 2020. Attentions now turn to US core retail sales and Chinese GDP data as key markers driving direction into the weekly close.

Key Movers

The signing of the US/China trade deal headlined market news through trade on Wednesday amplifying broad based demand for risk and helping foster an uptick across risk-based assets with the AUD and CAD leading commodity currencies higher against the USD.

The Great British Pound edged lower through trade on Wednesday testing a break below 1.30 following softer than anticipated inflation data. Consumer Prices rose at their slowest pace in three years in December advancing just 1.3% amplifying calls for the Bank of England to advance the timeline on loosening Monetary Policy. Having touched 1.2987 Sterling found some support in the wake of the US/China trade deal signing but remains under pressure as domestic economic performance continues to falter. Attentions now turn to Friday’s retail sales for deeper insight into economic health. Another soft read will all but force the BoE to lower rates and likely consolidate a move below 1.30.

Expected Ranges

AUD/USD: 0.6870 - 0.6930 ▲

AUD/EUR: 0.6150 - 0.6230 ▼

GBP/AUD: 1.8720 - 1.9020 ▼

AUD/NZD: 1.0380 - 1.0480 ▲

AUD/CAD: 0.8980 - 0.9020 ▼