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Currency Market Analysis

Dec 12, 2019 | Currency Market Analysis

Global Themes

Aussie jumps to five-week highs on Fed, trade hopes

• Aussie jumps higher
• Trade hopes, Fed provides support
• US tariffs loom

Aussie boosted

The Australian dollar saw solid gains overnight with a slow and steady rally during the European season reaching a climax thanks to a more cautious Federal Reserve.

Earlier, improved hopes for trade, after the US, Canada and Mexico signed a new deal, helped the Aussie dollar, with the markets also supported after finding buyers at the ten-day lows.

The AUDUSD’s gains reached a crescendo after US Federal Reserve chair Jerome Powell said the US will need to see “significant, persistent” inflation before raising official interest rates.

The move was the AUDUSD’s best one-day gain since 17 October.

Best levels

The AUDUSD gained 1.0% as it reached the best level since 8 November.

The best gains were versus the low yielding currencies with the AUDJPY and AUDCHF up 0.9%.

UK polls tighten

The action is likely to continue in FX markets with the European Central Bank meeting due at 11.45pm AEDT.

Tomorrow, the UK general election results are due, with the polls to close at 9.00am AEDT.

Of course, trade remains key, with the focus on the expected withdrawal of US tariffs due to start on 15 December.

If US President Donald Trump decides not to delay these tariffs, the AUD could be pressured.

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