AUD brushes off equity turmoil

Sean Callow, analyst at Westpac, suggests that considering the past week has included global markets being shaken by a collapse in a key US manufacturing survey, the S&P 500 kicking off Q4 by sliding to 5 week lows and of course the RBA rate cut, the AUD remaining above 67 cents is a resilient performance.

Key Quotes

“To be sure, the Aussie did briefly print a fresh low since March 2009 against the US dollar, around 0.6670. And while the trade-weighted Australian dollar is slightly above early August lows, the RBA should be content that its decision on Tuesday to cut the cash rate to 0.75% and reiterate that it is prepared to ease monetary policy further if needed will ensure the Aussie doesn’t see any of the quote “unhelpful” appreciation Governor Lowe warned about last week.”

“Westpac’s base case remains for no further change in the cash rate until February 2020, though there is some risk of a December move.”

“The Aussie dollar normally weakens when global equities are turbulent but it is almost flat over the week, in the mid-67 cent area. It appears the Aussie has been resilient against the US dollar in large part due to the fall in US yield support.”

“Short term, the Australian dollar has limited inspiration from China, with mainland markets closed for the annual National Day holidays until Tuesday. These holidays limit price guidance on iron ore but this week we saw that Australia’s trade surplus remained historically very large in August, at $5.9 billion, even as iron ore prices tumbled on trade war concerns.”

“Sluggish iron ore shipment volumes from Brazil add to the sense that Australia’s resources export earnings might hold up for a while yet, supporting the currency.”

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.