Daily Roundup – Markets review 20/03/2019


Daily Roundup – Markets review

March 20th

A fall in skilled job vacancies in Australia, combined with concern over progress in the US-China trade deal was sufficient to rattle AUD/USD through the Asian session, although despite these two concurrent pressures, losses appeared to have been short lived. The key point to watch for on the day ahead however is going to be the FOMC’s latest rate call, which could in turn deliver a significant bump higher for the US Dollar across all pairs.

There’s mounting belief that the Federal Reserve could yet confound the market by stating there’s still scope for one rate hike in 2019. That would come against a backdrop that currently prices in a 25% chance of a rate cut before the year end, so any such indication would have the potential to deliver some significant gains for the greenback in the near term. That belief however is far from universally held, with other suggestions being that sluggish domestic growth forecasts from the Fed may be sufficient to knock overseas interest in the US and in turn take a toll on the dollar. Either way, volatility seems likely later in the session.

Brexit rolls on, with this morning’s news that the UK would only apply for a short extension to the divorce proceedings and Brussels saying that any response is unlikely this week hitting Sterling. Although neither London nor Brussels have any interest in leaving without a deal – the economic cost to both parties is significantly higher that way – today’s developments have made such an outcome just a little more likely. Further indications that this could be the direction of travel will mean fresh rounds of GBP selling.

Australian unemployment data released tomorrow has the potential to provide further short term volatility for AUD, although clues over divergence in Australian and US yields off the back of today’s Fed are likely more influential. Similarly, although tomorrow’s UK retail sales figures are expected to show a slowdown, it’s going to be Brexit progress that will provide the bulk of direction for Sterling.


EUR/ZAR has been supported in recent days at the 38.2% reversion of the August – February sell-off. That level appears to have held, so look for a break to the 50% reversion around 16.6250.