AUD/USD higher as uncertainty fades
The Australian dollar extended its current rally versus the US dollar to a fourth day as Malcolm Turnbull won the Liberal Party leadership challenge. He had declared the leadership position vacant earlier today and beat rival Peter Dutton 48 votes to 35. Whilst Turnbull won the challenge, his position is seen as weakened by many observers, with Dutton resigning his post as Home Affairs minister and retreating to the back benches. Turnbull’s position became threatened following a drop in popularity and internal conflicts. AUD/USD is up 0.22% to 0.7355 on the day. The 55-day moving average is at 0.7409.
AUD/USD Daily Chart
RBA Minutes tell us nothing new
The release of the minutes of the last RBA meeting had nothing for markets to latch on to, given that Governor Lowe had recently testified before parliament. The minutes reiterated that the next move was likely higher if progress is made on unemployment and inflation, but saw no strong case for a near-term policy adjustment. They acknowledged that the risks to the global outlook came from trade protectionism and US fiscal stimulus, while any faster Fed tightening could lower the Aussie and support the domestic economy.
Trump criticizes the Fed
One month after criticizing the Fed for raising rates, US President Donald Trump has once again had a go at his nominated Fed chairman. He thought Jerome Powell would be a “cheap-money” leader to support his economic policies, but that has not been the case. The Fed has hiked rates five times since Trump took office, including twice this year whilst Powell has been in charge. The remarks were made at a private fundraiser on Friday and weakened the dollar.
Euro rallies as Trump accuses China, EU of currency manipulation
In an interview with Reuters yesterday, US President Trump accused China and the European Union of manipulating their currencies. The president’s accusations conflict with the findings of the Treasury Department in its last semi-annual report on foreign-exchange policy released last April, where it stopped short of naming China, the EU or any other country as a currency manipulator. The Euro firmed to its highest level since August 9 versus the dollar.
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