AUD - Australian Dollar
The Australian Dollar edged higher through trade on Thursday, creeping back toward 0.70 U.S Cents. Having touched intraday lows at 0.6966 the AUD found support in a broadly weaker US dollar as the worlds base currency fell across the board. Investors and markets have this week raced to amend positions and prepare themselves for an extension to trade hostilities and an increase in US-China tariffs this evening as trade talks appear to have failed. Last week’s optimism has all but evaporated and the subsequent risk off environment capped AUD upside preventing a move back through 0.70.
Attentions today are squarely affixed to trade talks and the RBA’s statement of Monetary Policy. Trade talks commence at 7am and a failed compromise will likely see a further US depreciation and may lend the AUD some short term support against the USD, however the dollars exposure to China and the longer term impacts of a sustained period of trade dysfunction will weigh on AUD upside and ensure the AUD remains toward the lower end of recent ranges, while forcing a correction against key crosses AUD/GBP and AUD/JPY.
The RBA’s statement on Monetary Policy will also shape direction into the weekend as investors looked for greater forward guidance following Tuesday decision to leave rates on hold. There is a growing consensus the RBA will be forced to cut the benchmark interest rate at some point in the coming 3 months and todays report may offer some insight into shifting RBA policy. A dovish signal will compound the recent AUD selloff and likely test support at 0.6950.
US/China trade talks have dominated direction through the week and will drive markets into weekend as trade delegate meet again today in a bid to negotiate an 11th hour compromise. Optimism a deal would be struck has faded this week fostering a risk off mood that has dampened demand for the USD, commodity led and emerging market units. The USD has fallen across the board as markets looked to the longer-term impacts of an increase in the current tariff platform. Given the increase to tariffs will apply to goods leaving china from today there is a small window of extended negotiation open as goods make there way to the US. Failure to reach a deal could dampen market expectations for US growth and sap some of the recent USD upside.
0.6920 - 0.7080 ▲AUD/EUR:
0.6180 - 0.6280 ▼GBP/AUD:
1.8580 - 1.8720 ▲AUD/NZD:
1.0550 - 1.0650 ▼AUD/CAD:
0.9380 - 0.9480 ▲