by Nicholas Cork

AUD stayed comfortably within the expected 0.7100/0.7150 range overnight, staying buoyant post the strong NZ CPI release which has taken the recent talk of a rate cut in NZ off the table for now.  In fact, expectations for an interest rate cut in the next 12 months have fallen sharply to 20% from 40% the previous day, and the next round of kiwi data will be now more closely examined for clues. NZD gains outstripped the AUD, and as a result the AUDNZD is a cent lower today near 1.0500.

The USD was lower against all currencies except the YEN as trade tensions, the Government shutdown and the IMF downgrades continue to weigh. The YEN itself weakened after the BOJ revised their inflation forecast lower (again, and again blaming oil).

GBPUSD has regained 1.3000 overnight after Britain’s opposition Labour Party said it would back an attempt by lawmakers to prevent a disorderly no-deal Brexit. This has led to another round of unwinding of short GBPUSD positions by speculators as they also decrease the likelihood of a disorderly Brexit, and Bank of America has reported that hedge funds and “real” money have all actually accumulated long GBP positions in the past week.

Locally today we have the release of Australian Manufacturing and Services PMI at 9 am Sydney time, followed by the closely watched employment data at 11.30 am where the market expects another reading near the historically low of 5.1%. Tonight the European Central Bank meets and the market will be awaiting the statement acknowledging growing threats to the euro zone economy.

AUD looking like it will push back above 0.7150 today if data is as expected.

40 years of employment rate (reuters)