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FOREX: Antipodean FX Outperforms as China Announces Stimulus Package

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  • After pausing for breath over the past two trading sessions, lower front-end yields (aided by weaker-than-expected US consumer confidence) in the US have helped tilt the USD index back into its weakening trend, currently down 0.27% as we approach the APAC crossover. 101.50 has proved supportive so far and markets will be eyeing a daily close below this level, something that has not occurred since July 2023.
  • While the China stimulus news has failed to spark a huge boost for major equity benchmarks, the potential ramifications of renewed China optimism is filtering through to risk sensitive currencies such as the Australian, Canadian and New Zealand dollars.
  • NZD (+0.89%) is the strongest in G10, with the latest leg higher gaining momentum through the August highs around 0.6300. Today’s high at 0.6328 matches the year’s peak from Jan 02, with 0.6369 the most obvious short-term target for the move.
  • AUD slightly lags the move, but has been subject to some decent two-way action on Tuesday. As noted, the RBA not discussing a rate hike at today’s meeting was seen as a very modest dovish development.
  • Elsewhere, EURUSD has made very slow progress back above 1.1150 and seems content to trade within the 1.11/1.12 for now as offsetting themes of weak Eurozone growth and optimistic global sentiment play out. USDJPY trades around 143.40, which is towards the bottom of another substantial, near 1%, intra-day range.
  • Australian CPI and US new home sales headline the economic calendar on Wednesday.
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  • After pausing for breath over the past two trading sessions, lower front-end yields (aided by weaker-than-expected US consumer confidence) in the US have helped tilt the USD index back into its weakening trend, currently down 0.27% as we approach the APAC crossover. 101.50 has proved supportive so far and markets will be eyeing a daily close below this level, something that has not occurred since July 2023.
  • While the China stimulus news has failed to spark a huge boost for major equity benchmarks, the potential ramifications of renewed China optimism is filtering through to risk sensitive currencies such as the Australian, Canadian and New Zealand dollars.
  • NZD (+0.89%) is the strongest in G10, with the latest leg higher gaining momentum through the August highs around 0.6300. Today’s high at 0.6328 matches the year’s peak from Jan 02, with 0.6369 the most obvious short-term target for the move.
  • AUD slightly lags the move, but has been subject to some decent two-way action on Tuesday. As noted, the RBA not discussing a rate hike at today’s meeting was seen as a very modest dovish development.
  • Elsewhere, EURUSD has made very slow progress back above 1.1150 and seems content to trade within the 1.11/1.12 for now as offsetting themes of weak Eurozone growth and optimistic global sentiment play out. USDJPY trades around 143.40, which is towards the bottom of another substantial, near 1%, intra-day range.
  • Australian CPI and US new home sales headline the economic calendar on Wednesday.