Harvey to bump the EUR/USD
By Yann Quelenn
US industrial production data for September will be released today: markets have not yet realised that it is likely to be weaker, thanks to the hit of Hurricane Harvey. That should be enough to nudge the Euro back up above 1.18 USD. Tomorrow’s Beige Book – the US Federal Reserve’s outlook on the economy – will be the next news event for EUR/USD. The greenback, which has largely weakened since the start of the year, is now facing upside pressures since European political worries are accelerating.
Australian central bank stays dovish
By Arnaud Masset
Markets expect an Australian prime rate hike no earlier than mid-2018. Minutes of the latest central bank’s monetary policy meeting were released early this morning: clearly the money-makers are taking a wait-and-see approach, i.e. no action for now. On Tuesday, AUD/USD consolidated at around 0.7850 after falling 0.50% on Monday. The currency pair is currently testing its 50-day moving average that stands at 0.7911. On the downside, a first support can be found at around 0.77-0.7684 (a psychological threshold of 200-day moving average).
Economic growth was in line with forecast (+0.8% in the June quarter) thanks to a pick-up in consumption and net exports, while there was solid growth in both full and part-time employment. Nevertheless, there is worry about the high level of household debt.
The strength of the Aussie reflects more the current weakness of the US dollar rather than a broad-based increase in demand for the Australian currency. Indeed, on a trade-weighted basis, although it trading with an upward bias for several years, the Aussie has stalled since the beginning of the year, as investors do not anticipate an Australian rate hike until next year.