Latest FX News – 22nd February 2019

       

Overnight Interbank Ranges AUDUSD 0.7070 – 0.7131 AUDEUR 0.6246 – 0.6272 AUDGBP 0.5420 – 0.5455 AUDNZD 1.0392 – 1.0433 Commentary • It’s been a messy 24 hours for the AUD which jumped up through 0.72 after a stronger than expected employment report (+39k jobs), but fell soon after, following Westpac’s change in call for RBA policy, suggesting that the central bank will cut rates in August and November. Markets now price a 62% chance of the RBA cutting rates by August and fully price a rate cut by November 2019. • The AUD took another lurch down after a Reuters report claimed that China’s Dalian port had banned Australian coal imports setting a 2019 quota. While the veracity is still being determined, the reported ban would impact a relatively small proportion of Australia’s coal exports (1.8%), however if the reported ban reflects a more significant deterioration in the trade relationship between Australia and China then it could have more important implications. • Frydenberg hitting the headlines as I type denying China has banned Coal imports and talking up trade relations. AUD jumps higher in response. • Data released overnight were mixed, but biased towards the downside with the general theme that services are doing well but other parts of the economy are struggling on both sides of the Atlantic. Data/Events today/this week • RBA’s Lowe Parliamentary Testimony at 9.30am. o Potentially an event of market interest even though there’s been a lot from the RBA of late. o We’ll be interested to see whether the Governor Lowe throws more light on how housing is proceeding, unpacking the Bank’s thinking and research in the (as yet unpublished) special paper on housing and implications for the economy presented at this month’s Board meeting. o The market is also interested in teasing out the relative upside and downside risks to the economy. Is the domestic outlook tilted more to the downside given that Bank lowered the growth outlook for household consumption? o Australia’s economic relationship and dependence on China will clearly be one of the topics that he will address in his opening statement and in the Q&A in the broader macro context.   Any questions please email shane@gmtfutures.com   Cheers   Team GMT Futures & FX