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Global Market Update
The View from Australia

Craig Killaby September 19, 2019



> NZ Q2 GDP : 0.5% v. 0.4% exp.

> AU August Unemployment Rate & Employment Change : 5.3% & 34.7K v. 5.2% & 15.2K exp.

> JP BOJ Interest Rate Decision : -0.10% v. -0.10% exp. (no change)

> UK August Retail Sales : -0.2% v. -0.2% exp.

> UK BOE Interest Rate Decision : 0.75% v. 0.75% exp. (no change)

> US September Philly Fed Manufacturing Index : 12.0 v. 10.9 exp.


Overnight Headlines (BBG)


>  White House’s Larry Kudlow says he sees “little softening” in the mood as U.S. and China trade deputies meet

>  Pound jumps as EU’s Juncker says Brexit deal is possible by Oct. 31


What you need to know


The downside pressure on the Aussie continued to mount yesterday, as the PBOC fixed the Yuan weaker ahead of the US/China trade talks and the RBA on the backfoot following the local employment numbers. The AUDUSD weakness started following the CNY fixing, while compounded a few minutes later on the August employment report. The report was not all bad, with the headline number beating expectations, however it is all about that unemployment rate as the Reserve Bank eagerly awaits their recent cuts to have an impact. With the UR moving 0.1% higher the pressure has surely mounted on the RBA to move yet again with the market pricing in the chance of a cut up to 81% in October.


Overnight, some positive developments from the Brexit discussions as the EU’s leader Juncker commented that he believes there is the possibility of a deal by the initial deadline in October. GBP and EUR shot up on the back of the news. As expected, no change in the BOE’s policy overnight as they are unlikely to rattle any cages as they attempt an orderly Brexit. All the crosses continue to edge lower, largely driven by the accentuated drop in the AUD against the Buck. The Fed injected liquidity yet again, in an attempt to control short term money markets. Commodity markets steady with the price of Iron Ore continuing its slide with Oil steadying following the Iran/US tensions perking up.


The Day Ahead




> JP August National Core CPI : 0.5% exp.

> US FOMC Member Williams to speak

> CA July Core Retail Sales & Retail Sales : 0.2% & 0.4% exp.

> US FOMC Member Rosengren


Not much going on in APAC today, there is a chance that the moves lower may have lost momentum and the Aussie looks to retrace back to the 55DMA. Overnight, it will be any sort of headlines on US/China trade that will move the needle. Whilst some Fedspeak from key members and Canadian Retail numbers will be the data highlights.


Range for the day : 0.6775 – 0.6860


AUD/USD Technicals


After unable to break above 0.6900, the negative data put pressure on the pair with the fresh low of 0.6780 now the support level to watch. Retracements likely up to the 55DMA around 0.6851 with upside surely capped at the 100DMA at 0.6894.


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