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RBA gives AUD support

Published February 6, 2019

After testing 0.7200 yesterday post Retail Sales data, the AUD got a boost back up after the RBA statement showed no signs of the board looking to cut rates just yet. The effect was immediate and within 10 minutes the currency was back at 0.7250, and was further bolstered by the market reaction to the Hayne report which saw the big 4 share prices’ rise sharply between 4 and 7 percent. The rest of the session was spent consolidating between 0.7225 and 0.7265 as we now await the State of the Union address from Trump around lunchtime and a speech by the RBA Gov.  

AUD has done well to hold to hold up at these levels as the Retail Sales data was the weakest in 12 months, but no doubt some relief for bank stocks was seen from the Hayne findings which would have forced the hedge funds hand to cover their short equity and currency exposures, thereby fuelling the rally.  And worth noting that this has now removed another of the risk factors that was weighing on the AUD into 2019 in the minds of investors.  Overnight no new trade news but the US is continuing to ramp up its objections to Huawei across Europe, and in an interesting development, Germany announced that they are ready to buy key stakes in their own domestic companies to prevent foreign takeovers .. “It can go as far as the state taking temporary stakes in companies – not to nationalise them and run them in the long run but to prevent key technologies being sold off and leaving the country.”  Germany also announced they will step away from coal by 2038.

Today, the market will closely focus on a speech by the RBA Governor titled ‘The Year Ahead’ at 12.30 Syd time … could be interesting.

ANZ share price vs AUD late yesterday (reuters)