ECB disappoints and overshadows improved trade rhetoric

Daily Currency Update

The AUD opens this morning largely unchanged having enjoyed mixed fortunes through trade on Thursday. Edging higher throughout the domestic session the AUD found support in reports trade talks between the US and China were progressing well as the two economic superpowers scaled back existing tariffs while waylaying scheduled new tariffs. Edging toward 0.69 the AUD touched intraday highs at 0.6893 before profit taking and disappointment at the European Central Bank’s policy announcement forced a downturn and shift back toward 0.6875. Additional downward pressure came following an uptick in US inflation data. Underlying consumer prices jumped 0.3% in August the largest year on year gain in 12 months, back-ending an uptick in producer prices on Wednesday and forcing the AUD back nearer 0.6850.
Despite the uptick in inflationary pressure markets are still anticipating the Fed will cut rates next week in a bid to stimulate the slowdown in domestic economic growth. Expectations for a loosening of US monetary policy and improved trade rhetoric have helped the AUD hold onto recent gains and have opened the door for a break above 0.69 should risk appetite and broader optimism continue.
Attentions now turn to Friday’s US retail sales print for a deeper look into US economic performance.