Australian dollar reaches three month high
Thursday 31 October, 2019
Daily Currency UpdateThe Australian dollar remained in a range bound pattern on Wednesday during the Asian trading session as inflation figures were released for the third quarter of 2019. Quarterly inflation met market expectations of 0.5% with the annualised reading seeing an increase to 1.6% on a trimmed-mean basis. Despite the higher figure, inflation levels still remain below the ideal band of 2-3% set by the Reserve Bank of Australia and dampens any hope of further interest rates cut this year.
Intraday highs hit 0.6872 following opening levels of 0.6862 and continued its march higher overnight to test 69 US cent resistance lines as the Federal Reserve cut interest rates again by 25 bps to a range of 1.50% – 1.75% and forcing the greenback lower.
Any move through the 69 US cent handle will be dependent on the release of local business approvals and the latest Chinese manufacturing print. The Australian dollar opens this morning at 0.6896. We expect support levels to hold on moves approaching 0.6850, while any upward push will likely meet resistance at 0.6950.
Key MoversThe US dollar was the major mover overnight as it dipped against the major G10 currencies following the decision by the Federal Reserve in the United States to cut benchmark interest rates by 25bps for the third time this year to a range of 1.50% – 1.75%. Dropping the line in the policy statement of “Will act as appropriate” signalled an end of future rate cuts and was supported by comments by Fed Governor Jerome Powell that the current stance is appropriate.
Initial movements higher were supported for the US Dollar Index (DXY) to 98.00 as a stronger than expected Advanced GDP print of 1.9% for the third quarter this year was aided by continued consumer and government expenditure. The DXY the moved sharply lower to 97.48 following the Fed Reserve announcement.
Across the globe it was announced in the UK that there will be a general election on December 12th, supporting the Great British Pound in its run up to 1.2900 overnight. The bill flew through the House of Lords, both readings unopposed as the country goes to its first Winter election in nearly 100 years with Brexit firmly in the minds of the public.
- AUD/USD: 0.6850 - 0.6950 ▲
- GBP/AUD: 1.8400 - 1.8900 ▼
- AUD/NZD: 1.0750 - 1.0850 ▲
- AUD/EUR: 0.6150 - 0.6220 ▲
- AUD/CAD: 0.9000 - 0.9120 ▲