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Improved risk sentiment helps to underpin AUD

Published October 17, 2018

Author: Dennis Li

After the RBA minutes released yesterday we saw the AUD continue to edge higher above 0.7100 against the USD, and rising US stock markets reflected an improved risk appetite. All the three main Wall Street indexes each rose more than 2% on upbeat earnings from some major blue-chip companies. The US dollar index (often referred to as a basket of U.S. trade partners’ currencies) was little changed on Tuesday while markets await the minutes from the Fed’s September meeting released at 6am Sydney time .

  • In its October meeting, the RBA will continue to keep a close eye on credit growth and availability following a period of tightening lending standards while the bank sounds more concerned about Sydney and Melbourne’s housing market, noting that ‘prices had declined noticeably’ but it still believes the next move in official interest rates is still likely to be up.
  • The US Trade Representative’s Office told Congress on Tuesday it intends to open trade talks with the EU, UK and Japan.
  • The European Commission has offered to allow Britain to remain in the EU customs union and internal market beyond an agreed transitional arrangement until the end of December 2020.
  • German investor morale dropped more than expected in October, a survey showed on Tuesday, as concerns about intensifying Sino-US trade dispute and risk of a ‘hard Brexit’ clouded the outlook for Europe’s largest economy.
  • China’s manufacturing inflation cooled for a third straight month in September with sliding domestic demand, indicating more pressure on the world’s second biggest economy amid an escalating trade war with the US.