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Consolidated by trade doubts

Published November 1, 2019

Author – Hayden Carswell

 

Yesterday saw the AUDUSD at the highest level since the end of July, but yet to break higher than the 200 day moving average around 0.6950. Overnight, consolidation capped these highs, driven by softer data and the reoccurring doubts whether the US and China will seal any sort of trade deal. The APEC November trade summit in Chile has been nixed due to social unrest. Participants are now looking for a new venue to sign the “phase one” part of the US & China deal. It has been reported that Chinese officials are casting doubts whether a long-term deal is even feasible.

On a surprise note, European data came out better than expected, growth was unchanged in the third quarter. Germany however is close to recession which is likely to affect its neighbors. The IMF was explicit that Germany should take advantage of negative rates to invest in social and infrastructure capital spending.

The bank of Japan held rates steady at -0.1%. Growth for GDP and inflation were trimmed, meaning low or lower levels for as long as the Government needs.

Solid domestic Australian data on housing and trade helped offset weak Chinese manufacturing and services. Going into the weekend, manufacturing PMI from China and US Employment will set the tone.