A pessimistic view of this week’s U.S.-China trade meetings and weak Australian economic updates kept the Aussie under pressure early on. But geopolitical news developed in favor of risk-on traders to help the Aussie climb higher and close the week with some wins against the other major currencies.
Australian Headlines and Economic data
- The AIG Australian Performance of Construction Index: down by 2.0 points to 42.6 (seasonally adjusted) in September from the previous month
- On top of the weak sentiment on Australia’s construction released earlier, the Aussie likely also felt pressure from negative geopolitically sparked global risk sentiment, specifically from reports of China seeking to narrow its trade deal with the U.S.
- Australian Business confidence dips again: NAB
- Job ads stabilise after Aug decline: ANZ
- During the U.S. session, optimism on the U.S.-China trade negotiations story continued to falter and send risk assets lower on the session after reports of the U.S. blacklisting more Chinese companies from trade, and possibly on reports of the White House looking to limit Chinese stocks within government pension funds.
- RBA Govenor Lowe: QE ‘most effective’ with broader fiscal policies
- Consumer confidence tumbles to four-year low in aftermath of recent rate cuts
- Australia mortgages point to “mini-boom” in housing but signs bleak elsewhere in economy
- The Aussie bottoms out and turns higher after positive geopolitical reports, most notably on the U.S.-China trade negotiation front (White House denies report China’s Liu He plans to leave Washington early; U.S. Weighs Currency Pact With China as Part of Partial Deal) and the news of a potential pathway to a Brexit deal. The Aussie moves strongly higher against most pairs with exception to the British pound which was obviously rocketing higher on a 180 degree turn from extreme negative Brexit sentiment from just a day or two previous.
- No fresh news or data from Australian on Friday, so it’s likely the net positive move higher continued on the latest positive geopolitical developments, and new updates on the session that included more positive updates to U.S.-China trade negotiations (Trump says ‘good things’ are happening at China trade talks), and possibly on the news that the Fed is extending its overnight funding operations through January 2020, a move that supports bank reserves to make sure overnight rates don’t spike higher again to stay within a targeted range.