Aussie breaks 0.7 on the prospect of a trade truce
Daily Currency Update
The Australian dollar inched its way above 0.7 for the first time in more than two weeks as US data failed to reignite the Greenback. Opening this morning at 0.7006, the Aussie was also aided by mixed reports ahead of tomorrow’s crucial G20 meeting.In what was a slow day on the domestic economic calendar, the Aussie found its feet as optimism returned to risk assets with reports that there may be a truce, if not a reconciliation on the cards for the world’s two largest economies. The optimism is fairly unfounded however with conflicting stories from a number of journalists muddying the consensus expected outcome to the talks. For example, Bloomberg speculates that the US and China are heading for an uneasy truce in order to return to the negotiating table. This would be complicated to achieve if what the Wall Street Journal is reporting is true. According to the WSJ, China is demanding a number of preconditions before coming to a trade war truce, including removing the ban on the sale of US technology to Huawei. Adding fuel to the fire, China will also demand that the US lifts all punitive tariffs and drop demands that China buy more US exports. Overall, the path to a truce seems opaque at best. Despite the mixed reports, the Aussie worked its way higher as a positive outcome for Australia’s largest customer is certainly a positive for the Aussie.
Moving into the end of the week the domestic calendar again looks bare. All eyes will be on the G20 meetings that kick off today for direction however.
Key Movers
The big movers overnight came from the Asia Pacific region with both the Aussie and Kiwi taking out the best performing currencies for the day. While gains have been muted at best, the Aussie did manage to break through key resistance at 0.7 while the Kiwi enjoyed its ninth consecutive day of gains to break through 0.67.Otherwise, it was a fairly muted session for other major currencies including the Greenback. The US Dollar had the opportunity to gain some traction ahead of the G20 meetings but was ultimately left where it started after US GDP came in as expected at 3.1%. There was some support for US equities however as reports of a positive outcome at the G20 meeting circulated. The S&P 500 gained 0.5% on the day as risk assets proved to be well bought ahead of the all important G20 meeting.
Expected Ranges
- AUD/CAD: 0.9126 - 0.9206 ▼
- AUD/EUR: 0.6128 - 0.6194 ▼
- GBP/AUD: 1.8006 - 1.8126 ▼
- AUD/NZD: 1.0403 - 1.0495 ▼
- AUD/USD: 0.6949 - 0.7054 ▲