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Currency Market Analysis

May 30, 2019 | Currency Market Analysis

Global Themes

Greenback hits six-month highs as Dow falls to three-month lows

The US dollar was strong again overnight after US sharemarkets plunged below a major technical level.

The US sharemarket’s break below three-month lows is seen as a negative sign by some analysts.

The US’s Dow Jones index fell to the lowest level since 8 February as worries about the US-China trade was, and a big drop in US bond yields, sparked fears of a broader economic slowdown.

The Dow Jones index fell 0.9% with the benchmark index now down 5.9% so far in May.

The US dollar and Japanese yen both jumped higher as markets favoured safe haven currencies.

Mixed

The Australian dollar, closely tied to global growth expectations, was pressured lower by weakness in US sharemarkets.

The euro fell again overnight as worries after the weekend’s EU election continue to pressure the currency.

The New Zealand dollar was also lower as weaker NZ confidence numbers hit the kiwi.

Pulse check

The Australian dollar faces a big morning with the critical March-quarter capital expenditure numbers due at 9.30am.

The capex number provides an update on business investment and intentions for further spending. In the near term, the number has a big impact on next week’s March-quarter economic growth numbers while, over the longer term, it will also flow into the Reserve bank of Australia’s decision making.

Tonight, US first-quarter economic growth numbers are due. The initial reading, released last month, saw a very strong annualised result of 3.2%


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