By George Hopkinson
The AUD/USD had a brief rally yesterday pushing the pair to 3-week highs. This was driven by mediocre employment data that was not as bad as the market expected. The rally was short lived before the US session commenced. The USD appreciated off the back of risk aversion around U.S.-China trade deal and Brexit uncertainty. Mr. Trump added that tariffs could remain on Chinese goods for a ‘substantial period’. The AUD/USD closed the session below the 20-day moving average, suggesting there could be further downside risk to the currency pair.
The NZD is stealing the spotlight as the best performing G10 currency. The positive GDP read yesterday helped strengthen the Kiwi against the greenback. The AUD/NZD cross is currently at the lowest level since September 2016. The 2019 divergence is shown by the AUD/USD and NZD/USD overlaid charts below.
The latest draft European Council document says the UK could be offered a Brexit delay to 22 May on the condition MPs approve the PM’s deal next week. The UK and the EU are in limbo around what extension could be put on the ongoing negotiations. Theresa May has urged Parliament to back her on Brexit and tells Britons “I’m on your side”. The GBP has retreated from its recent gains on the heightened uncertainty.
No key reports are due in Australia on Friday while in the US the flash PMI and housing data will be released. Brexit developments could impact on market sentiment as it rumbles on.
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