Daily Currency Update
AUD - Australian DollarThe Australian Dollar remains relatively unchanged heading into Wednesday, opening this morning marginally higher at 0.7135 despite an improvement in the Greenback's fortunes. Intraday trading led the Aussie to as high as 0.7146 before faltering and retreating to today’s open. There wasn’t too much to drive markets overnight but global growth concerns did ease slightly to see US equities and bond yields move modestly higher. FX rates echoed the sentiment although with a decidedly subdued tone. Closer to home, there was very little on the domestic docket to drive direction although RBA Assistant Governor Ellis addressed members of the Housing Industry Association. As widely expected there was little to note from the speech other than a repeat of the RBA’s much touted “wait and see” approach while also highlighting improvements in the Australian labour market. The domestic calendar is set to add as little value today as it did yesterday with only RBA Assistant Governor Kent’s panel appearance set to drive momentum. Off-shore events remain the key focus today with the RBNZ releasing their statement and official cash rate from across the pond. ECB President Draghi is also set to speak later in the session. From a technical analysis point of view the Aussie still appears bullish moving into Wednesday although continues to face resistance at 0.7150 with soft support around 0.7110. Short-term upside remains well and truly on the cards as fears of global recession recede although our view of significant broader risks in the medium term remain in play.
Key Movers
US equities and bond yields moved slightly higher over the past 24 hours as fears of a recession retreated. This did translate into positive moves for the Greenback which saw an appreciation of 0.18% to 96.81 on the US Dollar Index. In contrast to the improvement in risk appetite were some disappointing economic releases in the world's number one economy. The Conference Board’s measure of consumer confidence fell sharply while the survey’s labour market differential also fell, signalling some softening in the labour market. Housing starts also dropped sharply while building permits came in slightly weaker than expected. Overall, the data reinforces the view that US economic activity has started to slow. The Federal Reserve’s Rosengren also acknowledged the softening suggesting that Q1 GDP was likely to be “pretty weak” but said growth remains on course for 2-2.5% for the year. Rosengren cited concerns over Chinese and European growth as key risks in the global economy. We expect further short-term Greenback weakness. The Great British Pound also remains firmly in the spotlight as Brexit continues to roil markets. There was some marginal improvement for the Sterling overnight as key Brexiteer Jacob Rees-Mogg signalled he might support Theresa May’s deal. Yesterday morning, parliament voted 329 to 302 to hold a series of indicative votes on Brexit options to try and break the Brexit impasse. Votes will however be non-binding for the government but the idea is that it will reveal an option that the majority of Parliament will support. Rees-Mogg took the vote to suggest that it will boil down to a vote between May’s deal or not leaving at all and suggested some Brexiteers may move to support May’s deal which buoyed the Pound moving into Wednesday. All eyes in the UK remain fixed on the Brexit headlines. Across the channel the Euro continued to struggle and moved 0.2% lower overnight. In Europe, the focus now shifts to ECB President Draghi’s speech scheduled for later this evening.
Expected Ranges
- AUD/USD: 0.7050 - 0.7195 ▲
- AUD/EUR: 0.6191 - 06402 ▲
- GBP/AUD: 1.7572 - 1.9282 ▲
- AUD/NZD: 1.0265 - 1.044 ▼
- AUD/CAD: 0.9435 - 0.9639 ▲