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Global Market Update
The View from Australia

Craig Killaby September 14, 2020

Data/Speakers

 

> NZ August Visitor Arrivals : 8.8% v. 60.8% rev. prev.

> EU August Industrial Production : 4.1% v. 4.0% exp.

 

Overnight Headlines (BBG)

 

> Pfizer Inc.’s chief executive officer said the U.S. will likely deploy a Covid-19 shot before year-end

> Oracle became the winner of TikTok’s US operations, next steps will be a complete review by the US government

 

What you need to know

 

As expected it was an eventful day across markets with no major economic data on the docket investors are moving cautiously into the important FOMC meeting on Thursday AEST. The biggest mover was the NZD, getting a boost as PM Ardern announced that restrictions in New Zealand will ease from next week as the most recent COVID-19 outbreak starts to slow. NZDUSD is up 0.6% and the best performing major against the sliding Dollar. AUDNZD slid throughout the session down near 0.5% as the AFR’s article that the RBA is looking at other tools including lower their cash rate to assist AU out of the crisis. AUDUSD opens up a touch higher against the Dollar, failing yet again above the 0.7300 handle with an intraday high of 0.7304.

 

Boosting risk appetite was comments from Pfizer that they are on track for a vaccine by the end of 2020, with US President Trump touting that the US is turning the corner towards to a vaccine. Nothing new in the Brexit saga, with the clock ticking on the UK to commit to the agreement while the GBPUSD performed well on mostly option related flows. In Japan, Yoshihide Suga has won with an overwhelming majority to be the head of the ruling party putting him on track to replace the recently retired Shinzo Abe. Equity markets in the US performed well, seeing the S&P500 start the week in the black up 1.5% as investors place their bets ahead of the FOMC and buoyed by the vaccine ‘news’. Commodity markets have started the week well, with WTI crude down a touch although largely unchanged while metals all surged as Gold was the story ahead of the Fed up 0.9% while both Iron Ore and Copper up over 1%.

 

The Day Ahead

 

Data

 

> AU September Monetary Policy Meeting Minutes

> AU Q2 HPI : -1.3% exp.

> CN August Fixed Asset Investment : -0.5% exp.

> CN August Industrial Production : 5.1% exp.

> CN August Retail Sales : 0.0% exp.

> CN August Unemployment Rate : 5.6% exp.

> UK August Claimant Count Change & Avg. Earning Index : 99.5K & -1.3% exp.

> UK August Unemployment Rate : 4.1% exp.

> EU September German ZEW Economic Sentiment : 70.0 exp.

> CA July Manufacturing Sales : 8.8% exp.

> US September Empire State Manufacturing Index : 6.2 exp.

> US August Industrial Production : 1.2% exp.

 

Asian investors will get some economic data today with the RBA’s monetary policy meeting minutes on the cards, and with central bank commentary ever important any clues into a lower rate or more security purchases to be traded on. China dumps their monthly data release on markets, and barring any major surprises this should boost risk sentiment in the region as the recovery looks to be on track.

 

UK employment on the cards in Europe, however any sort of Brexit developments will likely overshadow. The Aussie looks a touch soft to open, however the surging Yuan, now sitting at the highest levels since June 2019 supports a move higher. Direction to be dictated by the RBA minutes and the Chinese data, although not expecting mammoth moves ahead of Super Thursday.

 

Range for the day : 0.7250 – 0.7315

 

AUD/USD Technicals

 

No change to the technical picture, with the pair still trading within the recent range and yet again failing above 0.7300 does not bode well for another run at the YTD high of 0.7414. Support seen at 0.7248, with a break there likely to have the pair test support at 0.7182 with 0.7076 the key for a shift.