17th December 2019 - RBA minutes today to emphasise 'long and variable lags' - AUD sidelined.

Good morning


• Overnight a bunch of European PMI releases for December - France manufacturing at 50.3 (51.5 expected) and services at 52.4 (52.1 expected). Germany manufacturing at 43.4 (44.6 expected) and services at 52.0 which matched the forecast. The EZ reading saw manufacturing drop to 45.9 (47.3 expected) with services at 52.4 (52.0 expected).

• UK PMI - Manufacturing disappointed at 47.4 (49.2 expected) with services at 49.0 (49.5 expected).

• U.S. Manufacturing PMI for December dipped slightly to 52.5 from expectations of no change 52.6 while the Services PMI rose to 52.2, up from 51.6 and better than expectations of 52.0.

• December Empire Manufacturing - came in at 3.5 compared to forecasts of 4.0.

• Canadian New Home Sales rose 0.6% in November, up from flat.

• Global stock markets rallied, lifting Wall Street's three major indexes to record highs after a preliminary U.S.-China trade deal pointed to stronger global growth, helping to drive up oil prices.

• Wall Street hit record highs for the third straight session - Dow Jones was up 0.48% at 28,271, S&P 500 was up 0.79% at 3,193 and the Nasdaq was up 0.99% at 8,821.


• The U.S. DXY was down -0.16% to 97.02 over caution with the future path of trade talks

• CNY eased from a 4-1/2 month high, trading back above the 7.0000 handle for the most part overnight. Ended slightly improved at 6.9920.- - -

• EUR saw back and forth trading action between 1.1125 and 1.1155.

• GBP reached a 1.3422 high however fell into NY close down towards 1.3320.

• AUD found some support ahead of the 0.6865 support level, trading up towards a 0.6898 high overnight.

• NZD fell from 0.6614 highs down towards 0.6593 lows overnight.

• AUDNZD saw an improvement, trading up from 1.0408 lows towards 1.0444.

• AUDEUR stabilised, trading for the most part in and around 0.6180 (hit 0.6192 highs).


• U.S. Treasury yields rose as markets took an optimistic view of a preliminary U.S.-China trade deal and drove stocks to new highs.

• The benchmark 10-year yield was 5.9 basis points higher at 1.8801%. The two-year yield was up 3.5 basis points to 1.64%

• Euro zone bond yields edged higher - Germany's 10-year bund yield at -0.2850% (off a six-month high of -0.217% hit on Friday).


• Gold held steady as the USD eased and investors sought clarity on the fine print of the "phase one" trade deal. Spot gold added 0.04% to $1,476 per ounce.

• Chinese iron ore futures fell, giving up the previous session's gains, as lower utilisation rates at mills and fresh data cast doubt on demand for the steelmaking raw material.

• Prices for spot cargoes of benchmark iron ore with 62% content for delivery to China rose to $95.5 a tonne.

• Copper prices rose - Three-month LME copper gained 1.1% to $6,199 a tonne.

• Oil prices rose slightly but remained below the previous session's three-month highs. Brent crude was up 12 cents (0.18%) at $65.34 a barrel. Crude oil settled at $60.21 a barrel, up 14 cents (0.23%).


• Australian Economic data today : October lending indicators and RBA minutes (will emphasise ‘long and variable lags’ as RBA hits pause).

• New Zealand – Q4 consumer confidence and December business confidence (both to slide and remain low).

• U.K. – October ILO unemployment rate (expected 3.9%). Remains low.

• U.S. – Nov housing starts (f/cast 2.0%), building permits (f/cast -3.8%), industrial production (f/cast 0.8%).


AUD held onto its hefty gains overnight after softer U.S. economic data saw the USD fall. AUD traded up towards 0.6900 (0.6898 high) as the continuation in risk improvement saw risk currencies prosper.

Commodity prices continue to remain solid and feed into positive support for AUD demand.

Today we have the local release of the RBA Minutes for December – emphasis to remain on the “long and variable lags in the transmission of monetary policy” that the Governor spoke of in his statement following the last Board meeting. Governor Lowe’s recent comments suggest he remains content to wait for more information on both the global and domestic economies to judge whether the Board needs to act on its easing bias as early as the next their meeting in February 2020.

Overnight the main releases centre on the U.S. with housing starts, building permits and industrial production.

AUD to remain relatively supported around current levels – await the RBA minutes today to see how they play out with emphasis on any further direction from the statement.


Trend line turns into support & RSIs showing some rising.

Spotlight on the 200-DMA currently at 0.6908 which will provide much of the resistance in the coming session.

Friday's high are hurdles for longs ahead of the RBA minutes. Any break above Dec 13 high (0.6938) will have longs target 0.6990/0.7010 resistance.

Immediate supports at 0.6855 (10 day moving average).