Kudlow comments sees US$ bounce

Finport Currency Brief - Courtesy of Compass Global Markets.

Good morning all;

AUDUSD: Comments from Larry Kudlow, US President Trump's new economic adviser, that he would buy the US$ and sell Gold gave the greenback a boost overnight. However, the move was muted as the market is falling out of love with the US$, mainly due to Trump's political merry-go-round, trade war's and ever increasing account deficit. Interestingly, the US currency has fallen 2.7% this year, adding to last year's 8.5% drop. Price action will start to get even more fascinating next week when we are due to have domestic unemployment numbers, the minutes from the most recent Reserve Bank meeting and of course the US Fed FOMC meet at which I expect them to hike interest rates - along with everyone in the markets. Nonetheless, this is priced in and so I see A$ higher this time next week and continue to test if not break 0.79c short term.

AUDEUR: The European Central Bank changed its tune ever so slightly on Wednesday evening, surprising the markets by withdrawing the "easing bias" it had held for many a meeting. However, they did say policy stimulus is not weakened by premature expectations of a first rate rise, so I'm looking for a first rate hike in the euro zone some time in mid-2019. This pair therefore failed to push past my 0.64c target, for now, but I do see another crack taking place next week once this temporary Euro strength abates.

AUDGBP: The Pound is shrugging off simmering tensions with Russia as Brexit talks continue to run smoothly and the market prepares itself for an interest rate hike at the Bank of England's policy meeting in May. Next week's meeting is expected to again pave the way for that so, as per last weeks note, those selling A$ can target 0.5650 as a "decent" level.

Jim Devonport

E: jim.devonport@finport.com

M: 0415 066 468

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