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Currency Market Analysis

Aug 22, 2019 | Currency Market Analysis

Global Themes

Aussie doesn’t stir in “night before Christmas”

FX markets were broadly unmoved overnight with traders on edge ahead of tonight’s first day of proceedings at the all-important Jackson Hole Symposium.

The Jackson Hole Symposium will host central bankers, policymakers and economists from all around the world to discuss potential policies to handle the ongoing global slowdown in an environment of near-zero interest rates.

Markets will be looking for clues about potential action from Europe ahead of the European Central Bank’s 12 September meeting. Japan is also expected to soon loosen policy.

US Federal Reserve chairman Jerome Powell is due to speak at 11.00pm on Friday (AEST) with the market watching for the Fed to react to US President Donald Trump’s call to cut US rates by 1.0%.

Small gains

The AUDUSD saw small gains of less than 0.1%.

The AUDEUR gained 0.2% while the AUDJPY was up 0.4% as it closed at the best level in a week.

PMI

Apart from Jackson Hole, today’s focus is on the release of the most up-to-date manufacturing gauges, the global PMI (purchasing mangers’ index).

These measures provide a key reading fo the health of the global economy with the fall in Chinese numbers at the start of 2018 providing the first evidence of a broader global slowdown.

Chinese and German numbers both now signal economic contraction while the US numbers, due at 11.45pm, are close to slipping into contraction territory with the last reading at 50.5. Anything below 50 signals an economic contraction.


By Steven Dooley, Currency Strategist APAC


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