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Currency Market Analysis

Oct 14, 2019 | Currency Market Analysis

Global Themes

Aussie at four-week highs on US-China trade deal

The AUDUSD jumped to four-week highs on Friday after the US and China agreed to “phase one” of a trade deal.

The deal, which sees China agree to buy USD50 billon in agricultural products and the US agree to suspend tariffs that were due to start this month, was less comprehensive than forecasts. As a result, the reaction in markets, while positive, was somewhat muted.  The US and China will now work out further detail with the “phase one” deal expected to be signed in early November. A further round of negotiations is also expected which means the ongoing trade newsflow is likely to continue -- with all the volatility that accompanies US-China trade talks.

AUDJPY jumps

The AUDUSD gained 0.4% as it moved to the best levels in four weeks. The best gains were seen in the AUDJPY with the pair up 1.0% with the market also climbing to four-week highs.

The AUDGBP plunged to four-month lows as the UK and EU worked towards a Brexit deal over the weekend. However, some analysts doubt whether a deal is possible ahead of the 31 October deadline.

Chinese GDP

Chinese data will be in focus this week with the trade balance due today and the all-important September-quarter GDP due on Friday. Locally, the Reserve Bank of Australia minutes, due Tuesday, will be closely watched with the market seeing a 30% chance of a cut when it meets on 5 November. Australian employment, due Thursday, will also be key this week.

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