Currency Market Analysis

Sep 25, 2019 | Currency Market Analysis

Global Themes

Greenback weakens as Democrats launch impeachment inquiry

The US dollar was lower overnight as markets reacted to news the Democratic Party would launch impeachment inquiry proceedings against US President Donald Trump.

Democratic Party leader Nancy Pelosi announced the plan at 5.00am but the move was widely expected overnight.

The US dollar’s losses were only moderate and partly driven by losses in US sharemarkets.

Further news on this topic might see the US dollar gain as the greenback typically benefits from fear-driven moves due to its “safe haven” status.

GBP higher as suspension ruled “unlawful”

In a big night for global politics, the British pound rallied after the UK’s Supreme Court ruled that Prime Minster Boris Johnson’s move to suspend Parliament was unlawful.

The GBP was higher as the market saw the move as making a “no deal” Brexit less likely.

Central banks in focus

Also overnight, the AUD was helped higher overnight after last night’s Reserve Bank of

Australia speech signalled the central banks was looking ahead to further rate cuts, but also signalled the local economy was nearing a “turning point”.

The market had expected the RBA to signal a rate cut next week and the mixed messages saw the AUD higher.

The market still believes a rate cut is more likely than not, with the bond market signalling a 62% chance of a cut.

This morning, the regional central banks remain in focus, with the Reserve Bank of New Zealand expected to keep rates steady when it meets at 10.00am.

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