AUD - Australian Dollar
The Australian Dollar initially surged against its US counterpart to touch highs of 0.7151 yesterday before coming undone as Wall Street opened. Opening this morning at 0.7123, the Aussie initially benefited from better-than-expected housing data with home loans up in February by 2% against an expected -2%. Investment lending for homes also increased in February with a reported 2.6% against an expected -2.3%. The positive readings saw the Aussie appreciate significantly against the Greenback, touching a near three week high. This however all quickly unwound as the American session started. Global growth concerns dominated the headlines with the IMF downgrading their global growth outlook from 3.5% to 3.3%, its lowest level since the global financial crisis. The US Dollar also came under buying pressure after Trump announced his intentions to raise $11B worth of tariffs against the under-pressure European Union which saw a wholesale sell-off in US equity markets.
Wednesday looks to be another relatively quiet day on the domestic docket for the Aussie with only the Westpac Consumer Confidence Index for April due for release and RBA Deputy Debelle set to speak. The global calendar however is set to enjoy a much busier session with the ECB meeting and the EU summit kicking things off followed by US CPI and the FOMC minutes. Technical indicators remain flat at the open with a short-term neutral-to-bullish stance. The Pair would need to break through 0.7170 to indicate positive momentum.
Market sentiment dominated currency movements overnight with the Japanese Yen the best performer, although movements have been modest. Headlines from the United States drove the retreat in risk sentiment with the IMF starting the decline early in the American session. The IMF cut its forecast for global growth from 3.5% to 3.3% in what it describes as a “delicate moment” for global economies. The IMF also cited a number of downside risks and the need for policymakers to be careful and considered to avoid any missteps. On the trade front, US President Donald Trump also tweeted his intention to impose $11b worth of Tariffs on EU imports in retaliation for subsidies for Airbus. US equity markets reeled on the news, pulling back significantly. Bond markets also retreated although relatively marginally.
Besides the Yen, the only other fluctuation of note was the Great British Pound which declined 0.2% ahead of the EU summit. The EU looks likely to reject Theresa May’s request for a short-term extension to the 30th of June and instead propose a longer extensions with certain conditions built in. The result will likely be significant headwinds to the Sterling until a soft Brexit option comes into better view.
Wednesday looks to be an eventful day for global economies with the EU summit and ECB meeting kicking things off in the European session. The US will also release their CPI figures and FOMC minutes later in the day with US CPI in particular of key focus for global markets.
1.0529 - 1.0595 ▲GBP/AUD:
1.8260 - 1.08405 ▼AUD/USD:
0.7052 - 0.7170 ▲AUD/EUR:
0.6275 - 0.6361 ▲AUD/CAD:
0.9436 - 0.9544 ▲