Risk Wobbles, the Aussie Holds 0.70 Into a Super Tuesday
What’s New
- Tech selloff spreads: the Nasdaq fell 2.9% on Friday, its biggest drop since June and close to 10% below its October peak, after Intel plunged 29% and Amazon disappointed on spending and growth. The S&P 500 closed below its 100-day average for the first time since February, and the Aussie slipped 0.44% to 0.7027.
- China’s factories stall: the official manufacturing PMI dropped to 49.3 in October against 50.0 expected, back into contraction, with the services gauge also below 50. The private RatingDog manufacturing PMI lands at 12:45pm today.
- Midterm maths shifts: betting markets now give the Democrats near 70% odds of taking both the House and the Senate on Tuesday. Gridlock would limit fresh US fiscal stimulus, a potential drag on the US dollar.
Still in play: Tuesday’s RBA hike to 4.85% (84% priced), Brent above US$113, a December Fed hike near 80% priced, and the kiwi’s RBNZ hangover.
|
Key Message: Risk off sentiment, not rates, moved the Aussie on Friday, and it still held above 0.70. Tuesday pairs the RBA with the US midterms, then the BoE on Thursday and US payrolls early Saturday close out a heavy week. |
AUD/USD
|
Overnight (previous session) |
||||
|
Open |
High |
Low |
Close |
Change |
|
0.7028 |
0.7045 |
0.7015 |
0.7027 |
â–Ľ Lower -0.44% |
Friday’s rout in US tech and month-end selling did the damage, dragging the Aussie from 0.7045 to 0.7015 before it closed at 0.7027, even as the US dollar index softened. This week the bias is modestly higher if the RBA delivers and a Democrat sweep weighs on the US dollar, though another leg lower in tech would cap any rally. Last week’s 0.7068 high is the first resistance, with 0.7015 and the 0.70 handle the supports to watch.
Currency Pair Directions
|
Pair |
Weekly Direction |
Range Bias |
|
AUD/USD |
â–˛ Higher |
An RBA hike and a possible post-midterm US dollar wobble tilt it up; a deeper tech slide is the cap, with 0.7015 to 0.7068 the range |
|
AUD/EUR |
â–˛ Higher |
The RBA moves this week while the ECB waits for December; Wednesday’s flash CPI is the euro’s one chance to answer |
|
AUD/GBP |
â—„â–ş Neutral |
The BoE is expected to match the RBA with a hike to 4.00% on Thursday, so neither currency gains a rate edge |
|
AUD/JPY |
â—„â–ş Neutral |
Tech-led risk aversion and a Tokyo holiday on Tuesday keep the yen bid, offsetting the RBA’s support for the Aussie |
|
AUD/NZD |
â–˛ Higher |
The kiwi lost 1.15% to the Aussie last week after the RBNZ hold; Wednesday’s NZ jobs data would need a big upside surprise to turn it |
Data key: â–˛ Higher (green) | â—„â–ş Neutral (amber) | â–Ľ Lower (red)
Upcoming Data Releases This Week
|
Date |
Release |
Prior |
Forecast |
Impact |
|
Mon 2 Nov |
AU MI Inflation Gauge m/m |
0.3% |
0.3% |
Low |
|
Mon 2 Nov |
AU Building Approvals m/m |
-6.1% |
2.1% |
Low |
|
Mon 2 Nov |
CN RatingDog (Caixin) Manufacturing PMI |
52.1 |
51.6 |
High |
|
Mon 2 Nov |
AU RBA Commodity Prices y/y |
15.5% |
15.1% |
Low |
|
Tue 3 Nov |
US ISM Manufacturing PMI / Prices Paid |
54.5 |
54.7 |
High |
|
Tue 3 Nov |
AU RBA Cash Rate decision and Statement |
4.60% |
4.85% |
High |
|
Tue 3 Nov |
AU RBA Press Conference |
N/A |
N/A |
High |
|
Wed 4 Nov |
US JOLTS Job Openings |
7.079M |
7.10M |
High |
|
Wed 4 Nov |
NZ Employment Change q/q / Unemployment Rate |
0.5% |
0.4% |
High |
|
Wed 4 Nov |
AU S&P Global Services PMI final |
51.3 |
47.7 |
Low |
|
Wed 4 Nov |
AU Household Spending m/m / y/y |
0.0% |
0.2% |
Low |
|
Wed 4 Nov |
EU Flash CPI y/y / Core CPI y/y |
3.8% |
3.9% |
High |
|
Thu 5 Nov |
US ISM Services PMI |
54.9 |
54.8 |
High |
|
Thu 5 Nov |
AU Trade Balance |
A$0.495B |
A$1.00B |
High |
|
Thu 5 Nov |
UK BoE Bank Rate decision, Monetary Policy Report and Press Conference |
3.75% |
4.00% |
High |
|
Sat 7 Nov |
US Nonfarm Payrolls / Unemployment Rate / Avg Hourly Earnings m/m |
29K |
63K |
High |
Public holidays: Tuesday 3 November is Melbourne Cup Day (Victoria) and Culture Day in Japan, so Tokyo markets are closed. No market holidays this week in the US, Canada, UK, EU, NZ or China. US Election Day on Tuesday is not a market holiday.
