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Market Update

EncoreFX’s daily market updates are written by our experienced and professional dealing team.

Searching for rate rise clues

Published March 18, 2019

by George Hopkinson

The USD eased back on Friday as weaker data drove yields lower. This week its fate is in the hands of the FOMC. For the AUD the week will start quietly, with employment the key event on Thursday.

The AUDUSD gained traction on Friday with renewed risk-on sentiment and rose toward the 0.7100 figure. The greenback then eased further into Friday nights session as weaker data drove treasury yields lower.

There were initial reports of the U.S. seeking to delay the Trump-Xi summit too late April however, Chinese news agency Xinhua claimed that both sides were able to make further progress in trade negotiations following Chinese Vice Premier Liu He’s phone conversations with Treasury Secretary Mnuchin and Trade Representative Lighthizer.

There are three key central bank data releases this week. The RBA meeting minutes released tomorrow and the FOMC and the BOE meeting on Thursday. All are expected to hold interest rates steady, however future interest rate direction clues will be searched for in the statements.

Other key data releases throughout the week include:

  • UK CPI Data – Wednesday
  • NZ GDP – Thursday
  • AUS Unemployment – Thursday
  • Japan CPI – Friday
  • German Manufacturing – Friday
  • Canadian CPI – Friday

We may see a tumultuous week in Europe due to the ongoing Brexit negotiations. PM Theresa May will be seeking an agreement with the EU to extend the deadline of Article 50.

On the technical side, the AUDUSD has stubbornly held on to the 0.7000 level. Of the last 24 trading weeks, 16 have seen the AUDUSD trade into the 0.70’s at some stage across the week. Yet there has only been one day where the AUDUSD dipped below 0.7000 – indicating a huge amount of AUD buyers exist at this level. This is fuelling the expectation that the AUD is undervalued.