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Global Market Update
The View from Australia

Craig Killaby February 11, 2019



> UK December GDP & Prelim GDP : -0.4% & 0.2% v. 0.0% & 0.3% exp.

> UK December Manufacturing Production : -0.7% v. 0.2% exp.


Overnight Headlines (BBG)


>  Trump’s advisers discussed holding a March summit with Chinese leader Xi Jinping at Mar-a-Lago: Axios

>  Four senior congressional negotiators are said to meet Monday to salvage talks over border security funding and avoid a second partial government shutdown


What you need to know


It was a very dull session in APAC, with the Aussie unable to find support above the 0.7100 handle after having a brief crack and drifting lower throughout the day’s trading sessions. With no real data on the docket, it was all about China volume and how it would affect the AUD and it looked as though it was a buy signal in the early portion. The AUD buying was limited with the Dollar regaining its favour in FX markets, relinquishing the losses seen thus far in 2019 with the DXY up 0.4% on the day. Gains came against the EUR and GBP for the Dollar, with Italian debt concerns weighing on the EUR as it hit the lowest level since November 2018 and more poor data coming out of the UK, with preliminary GDP figures missing market estimates and manufacturing production coming in far under contracting 0.7% in December. GBPUSD was down 0.6%, tied with the JPY as the biggest loser of the session with risk appetite taking a positive turn. Reports that a meeting between Trump/Xi boosted risk sentiment to start the week, although nothing firm has been agreed on at this stage. US equity markets edging out very minimal gains, with the S&P500 up 0.7% with the US/China trade relationship in focus. UST yields rising in unison across the curve, with both the 2s and 10s up 2bp. Not a good start to the week in the commodities space, after last weeks holiday in China saw Iron ore surge higher it started this week off in the red down near 2%. WTI crude unable to find support, down 0.6% and Gold also falling 0.6%.


The Day Ahead




> AU December Home Loans : -2.0% exp.

> AU January NAB Business Confidence : 3 prev.

> UK BOE Gov. Carney to speak

> US Fed Chair Powell to speak


Another quiet day in APAC as the sparse data calendar continues today with tier two data from NAB surveys and Home loans all to trade off for Asia. With all the discussions around the state of the housing market, home loans has come into focus as a continued expected fall in December would likely add fuel to the fire and growing concerns from the RBA. It is the first day in a week that the market will be at full volume with Japan back from their bank holiday, with bearish sentiment growing for the AUD it does not look poised to make a serious push higher until a resolution in the US/China discussions are made.


Range for the day : 0.7030 – 0.7090


AUD/USD Technicals


Very little change to the technical picture from yesterday’s report, while failing at the 0.7100 handle bearish sentiment continues to grow. With the 55DMA crossing the 100DMA and a fresh session low of 0.7057 a further move lower to the 0.7020 mark is not out of the question. 55/100 DMAs acting as strong resistance at the 0.7167/70 level, although a lot will have to change from a macro front to allow this move.


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