Risk-sensitive currencies hurt by struggling equities - Westpac

Analysts at Westpac noted that Asia's negative equity mood Friday continued into London and NY trade, weighing on risk-sensitive currencies.

Key Quotes:

"AUD/USD slipped under 0.7220. Commodities were mostly weaker, with oil at a 7 month low, though iron ore outperformed. Sterling weakened on renewed Brexit jitters. Today's calendar is low key, including a partial US holiday.

The US dollar was generally stronger. EUR/USD slipped from 1.1360 to 1.1315 and USD/CAD rose above 1.32. USD/JPY followed US bond yields and equities lower, from 114 in the Sydney morning to lows under 113.70.

AUD/USD reached its Friday highs around 0.7270 just ahead of the RBA quarterly statement, which wasn’t quite as bullish as expected. It steadied around 0.7240 in London, then slipped with US stocks to around 0.7220. NZD fell from 0.6755 to 0.6735. AUD/NZD is -0.2% over the full trading day, around 1.0720.

GBP/USD edged down from 1.3060 Friday morning to around 1.2980 at Friday’s NY close, then started the week in Sydney around 1.2920. It may have been undermined by weekend Brexit headlines. The Sunday Times claimed that four ministers who oppose Brexit are on the verge of quitting.

On Friday, UK data was mostly solid, but GDP showed some concerning details. The Sep trade deficit was narrower than expected, production levels were close to expectations (industrial flat on the month, manufacturing +0.2%) and Q3 GDP met expectations of +0.6%q/q. Net exports provided a GDP boost. However, the key issue was the sharp fall in business investment (-1.2%q/q, exp. +0.2%), which clearly shows that Brexit uncertainty is now undermining investment, as officials have feared."