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Currency Market Analysis

Oct 10, 2019 | Currency Market Analysis

Global Themes

AUD on edge ahead of tonight’s US-China trade talks

The AUDUSD remains pressured near ten-year lows ahead of tonight’s critical US-China trade talks.

Overnight, expectations for a positive result for these talks were dampened after Chinese officials said
this week’s move by the US government to black-list 28 companies accused of human rights violations had “surprised and upset” China.

The news saw markets turn lower after earlier gaining on hopes that both China and the US would settle for a less extensive deal.

Fed nerves

The other major news overnight came from the US Federal Reserve with the minutes from last month’s meeting signalling the central bank has turned move negative on the US and global
economies.

The Fed didn’t signal any immediate plans for further rate cuts but more recent commentary has indicated another cut is likely at the Fed’s next meeting on 31 October.

The AUDUSD saw only small losses with the pair down 0.1%.

The AUD was mixed in other markets, seeing reasonable gains in AUDJPY and AUDCHF.

US inflation

Apart from the US-China trade talks, the focus will be on US inflation, due at 11.30pm AEDT.

US inflation has risen to ten-year highs over the last few months but a slowdown in global economic activity means the US Feds focus has shifted to providing support to the US economy rather than placing a cap on price pressures.

Otherwise, UK GDP and the European Central Bank minutes will contribute to a big night in FX markets.

By Steven Dooley, Currency Strategist APAC


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