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Currency Market Analysis

Sep 13, 2019 | Currency Market Analysis

Global Themes

Aussie drops from highs as ECB disappoints

The Australian dollar dropped from the overnight highs after the European Central Bank’s move to loosen policy was met with disappointment.

To be fair, markets had moved strongly in the lead-up to the announcement, with the EURUSD plunging to two-year lows in expectation of a large-scale stimulus program.

The ECB announced a cut in its deposit rate, falling to -0.5% from -0.4%, new funding programs for banks, but a relatively small EUR20 billion-per-month money printing program.

Reversal

As markets reacted to the announcement, the Australian dollar fell.

The AUDUSD dropped 0.4% from the overnight highs to end flat, while the AUDEUR fell a massive
1.3% from the highs to end down 0.4%.

Trade hopes

Tonight’s data focus is on the US retail sales figures.

Last night’s better than expected inflation reading continued to signal the US economy remains relatively buoyant.

More broadly, the US-China trade talks remain likely to also drive markets, with improved sentiment overnight boosting hopes for a breakthrough when the two countries meet in October.

 
By Steven Dooley, Currency Strategist APAC


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