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Global Market Update
The View from Australia

Craig Killaby September 25, 2019



> NZ August Trade Balance : -1565M v. -1190M exp.

> NZ RBNZ Official Bank Rate Decision : 0.5% v. 0.5% exp (no change)

> US EIA Crude Oil Inventories : 2.4M v. -0.5M exp.


Overnight Headlines (BBG)


>  White House released a rough transcript of a call between President Donald Trump and his Ukrainian counterpart, while the Department of Justice said it found that the call didn’t breach campaign finance law

>  Chicago Fed President Charles Evans doesn’t see the need to cut interest rates again


What you need to know


The lack of local economic data has left the AUD open to moves from offshore, with the RBNZ the only real scheduled release. The RBNZ kept their policy unchanged as expected, with a cash rate sitting at 0.50%. Markets were looking for a more dovish than expected statement, causing the NZD to rally during the APAC session. Headlines have been the big mover of late, with news that China has submitted more waivers for companies to buy US agricultural products yesterday, this time it was pork. Initial reaction was another push higher in the AUD, touching the intraday high of 0.6804 on the headline. Overnight, the Brexit debacle continues, with no real progress made with PM Johnson emphatic on the October 31st deadline. Fedspeak and impeachment stories were the market movers, with some hawkish comments from US Fed members saw the Dollar rally 0.7% in DXY terms. The White House released their summary (not transcript) of the President’s call with the Ukrainian President where there was clear corruption, but no smoking gun. The DOJ has come out saying the call didn’t break campaign finance laws, however there is still a fair amount to unpack. With the election edging closer (November 2020) we can expect this to heat up substantially over the next year. The S&P500 pushed higher, up 0.60%. Copper the only real winner in the commodities space, with Gold the biggest loser down 1.7%.


The Day Ahead




> EU September German GFK Consumer Climate : 9.7 exp.

> US Q2 Final GDP : 2.0% exp.

> EU ECB President Draghi to speak

> UK BOE Gov. Carney to speak

> US FOMC Members Bullard and Clarida to speak


Absolutely nothing on the docket in Asia today, so any volatility will likely come on headlines and the Yuan fixing at 11.15am. Overnight, the impeachment developments will be watched but not a major risk at this stage. It will be US Q2 GDP and the heads of the ECB and BOE doing some speaking that are the major market risks. With no key levels broken, expecting range bound trade today with no data.


Range for the day : 0.6730 – 0.6805


AUD/USD Technicals


Still holding above the YTD lows, the bearish pressure is growing with the Dollar firming yet again overnight. Upside needs to break 0.6870 and the 100DMA at 0.6887, while downside support seen at 0.6736 and 0.6688.


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