20th November 2020 - AUD underperforms within the G10 despite blockbuster October labour market data

Good Morning,

Market Headlines

Choppy price action continued across the FX board, rising coronavirus contagions alongside restrictive measures on one hand and vaccine hopes on the other left majors confined to familiar levels. Senate Majority Leader Mitch McConnell has agreed to resume negotiations with Democrats over a potential new Covid-19 stimulus bill. At the beginning of the day market talks hinted that some EU leaders are pushing the European Commission to publish Brexit no-deal plans. Sources suggested that a deal must be clinched this weekend at the latest. The S&P 500 and the Dow Jones were both flat but the NASDAQ outperformed and gained 0.6%. Commodities, Brent crude oil futures fell 1.0% to $43.88, copper rose 0.2%, iron ore rose 0.5% to $127.40, and gold fell 0.5%.


AUD/USD: 0.7255 – 0.7297

EUR/USD: 1.1817 – 1.1852

GBP/USD: 1.3198 – 1.3264

USD/JPY: 103.77 – 104.22

USD/CAD: 1.3070 – 1.3122

NZD/USD: 0.6879 – 0.6911

AUD/JPY: 75.37 – 75.83

AUD/NZD: 1.0525 – 1.0564 (the lowest level since April)

AUD Thoughts

AUD/USD trade to a low of 0.7255 with further demand expected at 0.7240 and again at 0.7200 while offering interest remains thick ahead of 0.7340.

Event Risk Data Today

Australia: Market is expecting a 0.5% decline in October Retail Sales. Supportive factors include the dramatic improvement in Consumer Sentiment and Victoria’s ability to get the outbreak under control. To round out the domestic data, the ABS will release the “Business Impacts of COVID-19 Survey” for November.

Japan: The October CPI is poised to slip to -0.4%; the 2% target continues to move further out of range. The November Nikkei manufacturing PMI (prior 48.7) and Services PMI (prior 47.7) have recovered from their troughs, but an inability to print above 50 indicates that both sectors remain in contraction.

Euro Area: November Consumer Confidence will be seriously tested by the renewed lockdowns (market f/c: -18.0).

UK: Fresh lockdowns will serve as a serious headwind to November GfK consumer sentiment (market f/c: -34) and October retail sales (market f/c 0.0%). Meanwhile, October public sector borrowing will reflect the ongoing efforts to support the economy (market f/c GBP31.5b).

US: The FOMC’s Kaplan (00:30 AEDT), Barkin and Bostic (01:00 AEDT), and George (05:30 AEDT) will speak