According to Sean Callow, Research Analyst at Westpac, given the slide in the euro after the ECB meeting, it is notable that AUD rather than the euro is the softest G10 currency over the past week.
Key Quotes
“US-China trade tensions could remain in focus given a mostly low-key global calendar.”
“Last week was probably the most significant so far this year in terms of monetary policy decisions by major central banks, with the US Federal Reserve raising its key interest rate again and the European Central Bank laying out the road map for its bond purchases into end-2018 and declaring that its key interest rates would not be raised “at least through the summer of 2019.”
“Australia’s calendar was not nearly so exciting, with May jobs growth soft but the unemployment rate dipping to 5.4% and no real change in market expectations for the RBA cash rate: on hold until at least early 2019.”
“EUR/USD fell almost 2.2 cents in response.”
“Given this move, it is quite notable that AUD rather than the euro is the softest G10 currency over the past week. All major currencies fell against the US dollar but AUD’s -2.3% slide was the largest.”
“The extent of AUD weakness is thus a little puzzling, but it might be at least in part due to the re-escalation of US-China trade tensions.”
“AUD underperformed major currencies – even fellow trade-sensitive currency the kiwi – in March when US-driven protectionist trade measures were the main market focus, so this could be a persistent theme for the Aussie, which is starting the week very close to fresh 12 month lows under 0.7400.”
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