Australian dollar

Whilst Australian employment held up, it doesn’t let inflation off the hook as a weak print tomorrow could see rate cut calls resurface.

For the second day in a row, the Japanese yen is the weakest major currency as today’s heavy risk-on bent leads to selling in the safe haven currency. Meanwhile, the aussie has caught a big bid despite the RBA citing “increased risks” to the household sector.

The US dollar perked up mid-Asia, weighing notably on commodity currencies AUD and NZD ahead of the meeting. With a likely swing high in pace, AUD/USD could be headed for 70c.

The Australian dollar took a tumble across the board after today’s GDP miss. Coming in a 2.3% YoY versus 2.5% expected, it takes the 2018 average down to 2.9% and below RBA’s estimate of 3%.

US and Chinese trade negotiators kicked off another round of talks today after President Trump labeled last week’s discussions in Beijing “very productive.” Today and tomorrow feature lower-level officials to the table, with higher-level policymakers including US Trade Representative Lighthizer, Treasury Secretary Mnuchin, and Vice Prenier Liu He, coming to the table on Thursday and Friday.

Mirroring last week’s shift at the Federal Reserve, the RBA has now shifted its future interest rate expectations into neutral.

One of the first things that new traders to the FX markets learn is that many currencies are correlated with other markets. For instance, the close relationship between oil and the Canadian dollar or certain metals and the Australian dollar are intuitive given the importance of exporting those commodities for the Canadian and Australian economies.

Of all the major currencies, the Australian dollar is perhaps the most sensitive to trends in global trade. The country’s commodity-centric economy and close ties with China mean that any slowdown in international business may be seen Down Under first.

Two weeks ago, we noted that AUD/USD was testing a 20-month low on a “perfect storm” of bearish news. With trade and geopolitical tensions still running high, concerns about mortgage rates and metal prices remaining elevated, and bond yields continuing to fall, the fundamental outlook for the Australian economy is little changed.

As the final week of the month draws to a close, Aussie bulls are clearly licking their wounds. The Australian dollar has been the worst-performing over the month, week, and day so far as the currency faces a “perfect storm” of bearish developments...

The price action so far today is emblematic of a textbook “risk off” day: stocks are falling across the globe, oil is trading off by nearly 3%, bond yields are generally retreating, and the yen is the strongest performing major currency (though we would note that gold bugs still can’t seem to catch a break!).

“The trend is your friend” is one of the first market witticisms most new traders learn, with good reason: After all, buying pullbacks or breakouts in established uptrends and downtrends is the essence of many of the world’s most successful trading strategies.

Notwithstanding President Trump’s daily twitter condemnations (trade partners and the Federal Reserve drew his ire this morning), traders have started to look ahead to next week’s trade.

Another day, another round of trade war tweets drawing the attention of traders.

The primary market themes for the past week have been weaker-than-expected inflation pressures, a surge in the energy sector due in part to a planned US withdrawal from the Iran nuclear deal, and a partial reduction in geopolitical risk concerns due to North Korea’s apparent display of cooperation in releasing hostages ahead of US/NK June talks.

The US dollar slid sharply late last week due in part to President Trump’s announcement of impending U.S. import tariffs on steel and aluminum, sparking fears of global trade wars on the horizon.

Early next week features some key releases from Australia, including the minutes from the last Reserve Bank of Australia (RBA) monetary policy meeting in early February, and the quarterly Wage Price Index.

As the US dollar remained well-supported on Monday in the wake of last Friday’s highly positive US jobs report, and equities continued to trade under heavy pressure on rising interest rate expectations, Australian dollar traders were bracing for the potential impact of a major central bank decision and key economic data to be released on Tuesday in Australia.

The week ahead will likely feature heightened volatility for currency markets, depending in part on developments in US government efforts to avert a shutdown, as well as two major central bank decisions.

AUD/USD has spent more than a month climbing sharply as the US dollar has taken a dive while the Australian dollar has been on a strong rebound.

The US dollar fell on Wednesday after reports emerged that China may be considering either a slowdown or halt to its purchases of US treasuries. This resumption of US dollar weakness helped prompt a short-term rebound for the AUD/USD currency pair ahead of key economic data from both Australia and the US.

Looking ahead this week, several key data releases will likely have a significant impact on AUD/USD.