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Aussie falls 0.4% ahead of Inflation report

AUD - Australian Dollar

The Australian Dollar continued its poor run of form overnight, falling 0.4% to approach its year-to-date low. Opening this morning at 0.6873, the falls in the Aussie came from the North American session with some upbeat domestic data strengthening the Greenback. Adding fuel to the fire was another series of Trump Tweets accusing China of “ripping off” the United States by failing to purchase enough agricultural goods. The Tweets further weakened the Aussies position as the US-China Trade War continues to look precarious. Domestically, there was little to digest on Tuesday, although month on month building approvals continued to slide with the ABS reporting a fall of 1.2%. The weak report undermined the Aussie further and saw it barely cling on to the 0.69 level during the Asian session yesterday.

Wednesday packs a lot more excitement for traders with Australian CPI and Chinese PMI both set for release before midday. Nevertheless, the hard-hitting data will come through overnight with US Non-farm employment and the US Federal Reserve funds rate both set for release. Of paramount importance will be the Federal Reserve as they look to cut the fund rate for the first time since 2008. The market has 100% priced in a 25BP cut with the accompanying commentary to prove pivotal for traders.

Key Movers

The Great British Pound continued its woeful week by plummeting a further 0.5% during Asian trading hours. Opening this morning at 1.2155, the Sterling broke below 1.22 for the first time since March 2017. The Pound did manage to stabilise somewhat although the underlying drivers of the decline continue to weigh on the Sterling with a no-deal Brexit and new elections playing havoc with financial markets.

The Greenback otherwise traded sideways for much of Tuesday ahead of the FOMC funds rate due for release early on Thursday. Nevertheless, the Greenback did gain against the Kiwi, Aussie and Sterling but this was mostly offset against gains by the JPY and Euro. The US DXY opens this morning at 98.07.

Expected Ranges

AUD/CAD: 0.9003 - 0.9078 ▼

AUD/EUR: 0.6129 - 0.6192 ▼

GBP/AUD: 1.7648 - 1.7727 ▼

AUD/NZD: 1.0352 - 1.0431 ▼

AUD/USD: 0.6834 - 0.6898 ▼