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Aussie extends back through 0.70 US cents

AUD - Australian Dollar

The Australian dollar advanced through trade on Friday as the best performing major currencies when valued against the US dollar. The Aussie pushed back through 0.70 despite an upside surprise in US inflation data and increasing uncertainty as to the effects of the US-China trade war. While the current ceasefire prevents new tariffs from being implemented the current stock of export taxes has forced Chinese trade figures lower as year on year growth in imports and exports turns negative.

Instead investors attentions remained squarely affixed to comments made by Fed Chair Jerome Powell mid-week, wherein he greenlit a looser monetary policy platform. The comments all but affirm investors’ expectations the FOMC will cut rates at the end of the month, with 100% of the market pricing in at least a 25-basis point cut. Having touched 0.7020 the Aussie open marginally lower to start the week buying 0.7012 US. Cents as attentions turn to a raft of crucial Chinese data sets led by GDP, ahead of tomorrow’s RBA meeting minutes and Thursday’s unemployment print. An upside surprise in China may help consolidate the recent upturn however, investors will be wary of extending gains ahead of the RBA minutes. This months minutes will be important in determining short-medium term direction, labour market data will be crucial given initial RBA statements have hinted at the importance of employment numbers through the next 2-3 months.

Key Movers

The US dollar was weaker across the board on Friday down three tenths of a percent when valued against a basket of major counterparts. An uptick in the PPI index for inflation did little to quell comments from Fed Chari Jerome Powell, wherein the Fed Chair all but committed to loser monetary policy moving forward.

The Euro continues to struggle for direction. Despite the shifting USD monetary policy landscape the 19 nation combined unit remains hostage to sustained softness across domestic data sets and expectations the ECB will deliver another dovish address when it meets later this month. We expect the Euro to remain range bound between 1.14 and 1.1150 with no real catalyst for a break at hand.

Expected Ranges

AUD/USD: 0.6930 - 0.7030 ▲

AUD/EUR: 0.6180 - 0.6280 ▲

GBP/AUD: 1.7750 - 1.8050 ▼

AUD/NZD: 1.0400 - 1.0525 ▲

AUD/CAD: 0.9070 - 0.9180 ▲