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Groundhog week

Published April 8, 2019

By Nicholas Cork

The AUD starts roughly the 6th week in a row hovering near 71 cents, failing to break higher in New York after US employment data again surpassed expectations. The USD finished the week strongly, with most gains against made the GBP as the UK Labour Party said May hasn’t offered “real change” to her policy. Also, against the NZD which fell to lows not seen since January as it continues to struggle after the RBNZ’s tack change (note: AUDNZD hit highs not seen since January).

Most attention focussed on Trumps reignited attack on the Federal Reserve, saying to reporters “I think they really slowed us down. There’s no inflation.” He then went further to suggest the Federal pursue a “quantitative easing” monetary policy… “they should drop rates.” US yields fell slightly, the DOW ended mostly flat. In Venezuela, things are continuing to not go the way the US wants, as the US has now signed an agreement with Switzerland for them to represent U.S. interests in Venezuela after they broke off diplomatic relations with Washington. In more positive news, the pickup in Global PMI’s is helping to form signs of ‘green shoots’ in the global economy, with resultant gains in global GDP as shown in the chart below.

AUD is not seeing much on the horizon as not even Brexit and US-China trade cannot shake it from its 70/72 cent range. Offshore data will become the driver this week with the ECB rate decision and the FOMC minutes due to be released.  Continue to watch AUDJPY for sentiment direction as it continues to grind slowly towards the psychological 80.00 level.

Source: J.P Morgan