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Global Market Update
The View from Australia

Craig Killaby September 23, 2019



> EU September Flash Manufacturing & Services PMI : 45.6 & 52.0 v. 47.6 & 53.1 exp.

> CA July Wholesale Sales : 1.7% v. 0.0% exp.

> US August Flash Manufacturing & Services PMI : 51.0 & 50.9 v. 50.3 & 51.5 exp.


Overnight Headlines (BBG)


>  Fed takes stock of battered money market as uneasy calm returns; Williams says repo turmoil raises question on reserves, while Bullard says more rate cuts may be needed to offset risks

>  UK Supreme Court to rule on the validity of Boris Johnson’s Parliamentary suspension this evening


What you need to know


Relatively tight range for the Aussie during APAC trading, with no news on the docket it was a lacklustre session. The pair has found a comfortable position below the 0.6800 handle as bets of an RBA rate cut soared following the tick up in the unemployment rate last Thursday. RBA Gov. Lowe is due to speak this evening, although many believe that the RBA have been hinting to the major banks at a cut next month and the markets believe the same with probabilities up to 82% of a cut in early October. Europe was the highlight of the data docket, and the data did its best to dampen to mood with the PMI figures coming in very poor across Europe. The data shows that the slowdown may be worse than they initially hoped and may spur on the ECB to ease policy even further.


The GBPUSD was the worst performer of the session, with the Pound falling as much as 0.6% as markets await the result of the Supreme Court’s decision this evening. Although the risks of a no-deal Brexit have subsided over the month of September, corresponding with a 5.2% rise in the GBP, tonight’s SC decision regarding Boris Johnson’s Parliamentary suspension will be very important. In the US, Fedspeak from Bullard and Williams commented that more easing may be on the docket, while PMI numbers from the manufacturing sector September posted better than market expectations. The USD looks to regain some strength post Fed, while the slight softening of the US/China trade talks to end the weekend (cancellation of the Chinese to US Agricultural regions) did some to reinforce the DXY move. Stocks down to start the week, while commodities mixed as Gold the biggest winner up 1.6%.


The Day Ahead




> JP September Flash Manufacturing PMI : 49.5 exp.

> JP BOJ Gov. Kuroda to speak

> EU September German IFO Business Climate : 94.5 exp.

> AU RBA Gov. Lowe to speak

> US CB Consumer Confidence : 134.1 exp.


Another quiet day on the economic calendar in Asia, with the highlight to come this evening with Gov. Lowe’s speech. After there looked to be some optimism growing for the AUD and the march back towards 0.7000 looked to be on the table, the unemployment rate was a significant step backwards and limits the upside. With Japan back there may be a wider range, however expecting similar sort of trading day as Monday.


Range for the day : 0.6755 – 0.6790


AUD/USD Technicals


With the momentum now turning well and truly bearish, the levels to watch are the recent lows of 0.6760 and 0.6755 with a break lower leaving the pair vulnerable to 0.6688. Runs higher will be called at the 100DMA, sitting at 0.6892 although a change in the interest rate landscape would be needed to see this happen.

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