- The Australian dollar has opened the new trading week slightly weaker against the greenback.
- The US dollar is finding support from continued buying against the euro and British pound.
- US markets will be closed today for the Veteran’s Day holiday.
The Australian dollar fell modestly on Friday, mirroring a broader deterioration in risk appetite seen during the session.
It’s since gone on with that move in early Asian trade on Monday, at least against the greenback.
Here’s the scoreboard at 8am in Sydney.
AUD/USD 0.7212 , -0.0012 , -0.17%
AUD/JPY 82.08 , -0.15 , -0.18%
AUD/CNH 5.0233 , -0.0131 , -0.26%
AUD/EUR 0.6371 , -0.0004 , -0.06%
AUD/GBP 0.5580 , 0.0016 , 0.29%
AUD/NZD 1.0718 , -0.0005 , -0.05%
AUD/CAD 0.9531 , -0.0007 , -0.07%
After closing the week at .7224, the AUD/USD is currently trading at .7212, largely reflecting continued weakness in the British pound and euro from Friday evening, helping to support modest gains in the US dollar Index.
“GBP — and with that EUR — has opened almost half a percent lower this morning amid reports of potentially more Cabinet resignations, as yet no ‘breakthrough’ on the Irish border backstop question that would satisfy the 10 Northern Irish DUP MPs who prop up the government, or whether the deal that looked to be getting closer to ‘done’ last week,” said Ray Attrill, Head of FX Strategy at the National Australia Bank, referring to ongoing Brexit negotiations.
“The repeat lesson is that the USD can’t go down if the EUR and GBP aren’t going up, and that the USD goes up when risk sentiment goes down.”
Along with continued speculation over Brexit, large declines in US stocks on Friday, along with a stronger-than-expected US producer price inflation report for October, helped to fuel gains in the US dollar despite lower US government bond yields.
Despite being a major LNG exporter, the Aussie dollar has shown little reaction this monring to reports that Saudi Arabia will reduce crude oil output by 500,000 barrels per day in December.
“Whether Iraq and Russia would come on side here is crucial,” Attrill says.
“Certainly the technical committee of the cartel that met on Saturday determined that on current production levels, the oil market was likely to be oversupplied in 2019.”
With US markets closed for the Veteran’s Day holiday, Monday looks set to be a quiet session for currency traders, especially with little first tier economic data scheduled for release.
New Zealand electronic retail sales, Japanese corporate goods prices and Singapore retail sales data are the only major releases of note in Asia.
Given the quiet data calendar and absence of US markets, the broader movements in the Aussie are likely to be influenced by the performance of Chinese financial markets, especially the yuan, along with movement in crude oil futures.