Good morning,

Average day for the US dollar

It’s all about the averages for the greenback at the moment – in other words, there’s not much movement. As you can tell from the short paragraphs in this update, there is not much going on in markets this week, ahead of what will be a difficult run into Christmas with a Fed meeting, an ECB meeting and a plethora of Brexit back and forth. Right now, we are trying to enjoy the calm as best we can. Overnight, President Trump has designated North Korea as a state sponsor of terrorism that will see new sanctions announced on the ‘Hermit Kingdom’ and therefore tensions on the Asian continent may ratchet up a few notches. Janet Yellen also tabled her resignation yesterday contingent on Jerome Powell navigating the confirmation process successfully. He is due to take over in January as Chair of the Federal Reserve.

Single currency holding its head up

To give the single currency its dues it held up well yesterday and recovered ably as the day went on despite the ongoing lack of government in Berlin. Angela Merkel herself has said that she would prefer to hold a new election than govern from a minority position. This is a calculated political bet that the German electorate will not blame her for the collapse of the talks and that the lack of a government will in some way focus voters’ minds on who they actually want to lead the country.

AUD rebounds from lows

The biggest mover overnight has been the AUD following the latest set of minutes from the Reserve Bank of Australia that suggested that rates will likely stay at low levels for an extended period of time and that there was “considerable uncertainty” around when wages pressures would emerge. A speech by Governor Lowe has allowed the Aussie to recover somewhat through the European session in the knowledge that the next move in interest rates will be higher not lower.

Have a great day.

Jeremy Cook, Chief Economist