AUD - Australian Dollar

The Australian dollar held steady overnight as risk sentiment appears to have improved on easing trade war tensions. Opening Wednesday morning at 0.6727, the local currency moved to overnight highs of 0.6750, ignoring a dismal Westpac Consumer Sentiment reading of -5.5%. The print was a four year low despite another round of interest rate cuts by the RBA this month, which normally boosts spending and confidence levels for households.

A partial trade deal looks to be on the cards as a Chinese official has told Bloomberg they confident of wrapping up positive talks this week. A partial deal will stall any further breakdowns and limit further damage to an already souring relationship. China has offered to increase their agricultural imports as long as United States President Donald Trump does not impose any more tariffs on goods.

Any upside was limited as the greenback clawed back losses as the FOMC released minutes this morning. The AUD/USD finished flat for the day as markets look towards MI Inflation expectations and Home Loan data scheduled for release this morning.

The Australian Dollar is currently trading at 0.6723. We expect support levels to hold on moves approaching 67 US cents, while any upward push will likely meet resistance at 0.6770.

Key Movers

The Federal Reserve Meeting Minutes were released this morning showing the majority of policymakers were in support of a 25-bps cut in the September meeting. The outlook is somewhat uncertain though as to how many further cuts they are willing to make as several policymakers noted forward guidance might be needed.

Slowing growth and trade war uncertainty continue to be the main themes released by central banks globally with the CME FedWatch tool pricing an 83% chance of a further 25bps rate cut at this month’s meeting on October 30th.

There was little movement on the Dollar Index following the news. The USD/JPY cross jumped 0.37% higher on the day on trade deal hopes. Markets participants look towards the release of Core inflation this evening in the United States along with the latest release of ECB Monetary Policy Meeting Accounts.

Expected Ranges

AUD/USD: 0.6700 - 0.6770 ▼

GBP/AUD: 1.8000 - 1.8400 ▼

AUD/NZD: 1.0620 - 1.0720 ▲

AUD/EUR: 0.6090 - 0.6160 ▼

AUD/CAD: 0.8920 - 0.9000 ▲

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