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72 Cents in sight

Published February 27, 2019

By Nicholas Cork

A day without any fresh news has seen currencies consolidate overnight and helped AUD continue to push on towards 72 cents as investors embrace risk again. The USD eased slightly after Federal Reserve Chairman Jerome Powell told a Senate committee that “conflicting signals” warrant a patient approach to future policy changes, causing US yields to ease after earlier rising on a strong consumer confidence reading. He also said that a healthy U.S. economy has faced some “crosscurrents and conflicting signals” that officials in January decided warranted taking a patient approach to future interest-rate changes …..

The GBP raced to 5 month highs overnight against the USD and 21 month highs against the EURO, as no deal prospects faded a touch following PM May’s announcement she could seek a delay to the March 29 Brexit date if parliament refuses to back her Brexit deal.  There will be a vote on the withdrawal agreement on 12th March which will include whether to leave without a deal in place.  If that fails there will be a vote on March 14 on extending the 29 March deadline for leaving the EU. (see diagram below)

Attention today will swing to the US – North Korea summit underway in Vietnam for any snippets of new news, but only a short meeting is scheduled for today. One geopolitical risk to keep an eye on is the India – Pakistan skirmish which has seen India’s first use of air strikes against Pakistan since 1971.  Australia has called for restraint but not sure who else is watching.

AUD to trade within 0.7150/0.7250 today.

Brexit voting map  (BBC)