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AUD / USD
In a decision unanimously anticipated the Reserve Bank of Australia maintained the existing cash rate at 1.5 percent. Whilst the accompanying statement was well neutralised, suggesting a window of monetary policy stagnation over the medium-term, specific mention was given to the strength of AUD with policy makers stating that future exchange rate levels would be a key contributor for economic activity and inflation. Falling in the aftermath the Australian dollar has failed to consolidate levels up above the 80 US Cents mark overnight, opening 0.5 percent lower this morning at a rate of 0.7967.
Great British Pound
GBP / AUD
USD, EUR, JPY
The US dollar saw some relief overnight as the US Dollar index looks to claw its way back from its lowest levels since May 2016, trading slightly higher at 93.05 and up 0.22% for the day. Inflationary measures in the US core PCE release was slightly higher and provided support for a slight reversal in recent USD downward movements. United States Manufacturing PMI came in at expectations with manufacturing prices expanded for the month of July. Despite European area flash GDP growing by 0.6% for the 2nd quarter of 2017, EUR/USD took a breather from its recent highs and pulled back to short term test support at 1.1800 after seeing initial highs of 1.1837. Despite a dip below 110 overnight the USD/JPY cross held firm as Japanese Yen saw weakness on political developments with a reshuffle by Prime Minister Abe this week. ADP Non-Farm Employment figures is the major news release over the next 24 hours.
New Zealand Dollar
NZD / USD
0.7350 – 0.7500
The Kiwi fell in overnight trading as the Greenback hit back against is detractors. Bundled in with other "commodity" currencies, the Kiwi shed 0.5% from its daily high of 0.7504 in overnight trading. Further compounding the decline this morning were below expectation employment numbers that drove the Kiwi down further from its open price of 0.7470. Now trading at 0.7420, the New Zealand Dollar was also weighed down by dairy prices easing by 1.6% at the latest GlobalDairyTrade auction. Traders now turn to a speech by the Reserve Banks Deputy Governor Grant Spencer for further insight.
Closing out the month of July with gains totalling 4 percent when valued against its US Counterpart, the Australian dollar whilst enjoying a quieter session on Monday has remained well and truly in a position of strength. Etching out 0.2 percent worth of gains yesterday, Manufacturing and Non-Manufacturing PMI' from China had only a muted impact on the domestic unit as investors upheld their laser-like focus on the RBA who meets today. Given no change in the underlying cash rate is expected, their economic outlook along with any perceived shifts towards a tighter policy stance will undoubtedly be a key driver for the AUD. Sensing it all lies ahead, the Australian dollar currently buys 80.01 US Cents.
Commodity currencies were boosted overnight as US crude oil prices rose to two month highs and above $US50 a barrel. Solid Chinese data also saw Chinese Iron Ore jump 8% to eight month highs during Monday trading. Political risk has come to the forefront of investor minds overnight in the United States as further turmoil in the White House as communications director Anthony Scaramucci lasted just ten days The US Dollar Index fell another 0.5% overnight to 92.85 and has closed at its lowest since May 2016. End of month readjustments and a stable European inflation print saw the EUR/USD hit 2 ½ year highs of 1.1845. The US Dollar has also extended its losses against the Japanese Yen, seeing a 0.5% drop overnight to reach overnight lows of 1.1022.
0.7450 – 0.7600
The New Zealand Dollar remains largely unchanged when compared to its US counterpart. Again treading water just above the 0.75 mark, the Kiwi traded within a relatively tight range, oscillating between 0.7468 and 0.7522. Again, the main theme of USD weakness remains the driver of direction in the pair. Over in Europe, the New Zealand dollar fell to a two-week low of 0.6344 against the Euro. The Eurozone posted a slight dip in unemployment and stronger inflation which supported the broader narrative of central banks tapering accommodative monetary policy. Across the Tasman, the Kiwi remained static against the Aussie trading overnight at 0.9390. Ahead of NZ unemployment numbers on Wednesday, traders look to the Australian RBA rate statement slated for release today for direction.
Proving to be another monumental week for the Australian dollar, which saw investors successfully navigate additional commentary from the RBA, a domestic inflation print as well as the delivery of key growth metrics from the United States. Spending the majority of the past five days within reaching distance of the 80 US Cents mark, over the coming days investors will be looking to recapture highs of 0.8065 versus its US Counterpart amid hopes that the RBA' August 1st interest rate decision will spur further demand for the AUD as participants look for any indication of a greater willingness to move away from its current easing cycle. Ahead of key manufacturing prints from China this morning the Australian dollar currently buys 79.82 US Cents.
Friday movements were dominated by the release of United States GDP figures for the 2nd quarter of 2017. Despite a solid number at an annualised pace of 2.6% vs expectations of 2.7%, The US Dollar was sold off against G10 currencies. EUR/USD rebounded to see its highest weekly close of 1.1755 since January 2015, supported by broad US Dollar weakness and a stronger German CPI print. USD/JPY hit fresh 6 week lows, tumbling from intraday highs of 111.30 to close at 110.60. The DXY fell 0.6% to close at 93.34 as the CME Fedwatch Tool has reduced slightly to a 47% chance of one further interest rate increase by the Federal Reserve by year end.
The New Zealand dollar again pierced the 0.75 mark to open this morning at 0.7509. The Kiwi was strengthened in overnight trading by a weaker US dollar as the broader narrative of a softer greenback was vindicated to an extent by lacklustre US GDP numbers. Oscillating between 0.7494 and 0.7512, the New Zealand Dollar shows no signs of fatigue with the US being in the driving seat to determine direction this week. Locally however Traders will also look to the ANZ business survey for direction with an eye on Wednesday' Q2 Labour market data.
0.7900 – 0.8000
One of the strongest global performers yesterday the Australian dollar broke down key resistance levels when valued against its US Counterpart on Thursday, comfortably breaching the 80 US Cents mark. Despite a week which has been jam packed with key risk events, the AUD has seemingly been on auto-pilot with favourable risk proximities as well as a muted Greenback both providing a solid platform for its push forward. Suggesting there wasn’t a great deal of conviction underlying the climb higher, highs of 0.8065 proved to be relatively short-lived and despite a trading range in excess of 1 US Cents the Australian dollar once again opens in a familiar position of strength, albeit slightly lower than the same time yesterday at a rate of 0.7967.
1.6300 – 1.6450
The greenback advanced higher overnight against its major counterparts, having reverted most of its post-Federal Reserve losses. The EUR /USD pair reached a high of 1.1776 earlier in the day. Now trading at 1.1676. Against the Pound Sterling the Greenback reached a 24-hour high of 1.3158 before settling around 1.3062. On the US data front last night Durable Goods Orders surged by 6.5% in June, beating expectations of a 3.5% advance. We also saw the release of Goods Trade Balance for the month of June, the trade deficit was of $63.9B, better than previous months $65B. Weekly US jobless claims climbed by 10,000 for the week which came in at 244K, up from previous' week 234K. Looking ahead today the main data release will be US Q2 preliminary GDP with expectations the US economy grew by 1.3% in the three months to June.
0.7400 – 0.7550
The New Zealand Dollar retreated in overnight trading after reaching a 26-month high against the US Dollar. Opening this morning at 0.7490, the Kiwi advanced yesterday to as high as 0.7557, spurred on by what traders considered to be a dovish statement from the United States Federal Reserve. As the American session opened overnight however, the Greenback hit back against its detractors clawing its way back on the strength of US durable goods orders and further consideration of the Fed' statement. Across the Tasman, the Kiwi traded within a tight range and opens this morning at 0.94, reflecting the midpoint of the weekly range. Looking ahead to a light domestic economic calendar, direction is expected to be derived from off shore data. In particular, traders will look to US GDP numbers later in the evening.
0.7900 – 0.8050
The Australian Dollar soared in overnight trading in the wake of a dovish Federal Reserve statement. Reaching a high of 0.8013, the Aussie opens this morning slightly lower at 0.8001. Starting yesterday in relatively neutral territory the Australian Dollar quickly saw some movement when the Australian CPI results came in under expectation. Falling rapidly to 0.7878, the Aussie regained much of its losses during the Asian session as commodities again fuelled demand for the Aussie. Led by Iron Ore, the AUD rebounded to above the 0.79 level before the Federal Reserves’ comments sparked a broad sell-off of the USD and sent the Aussie even higher to finally pierce the 0.8 mark. Traders now turn back to off-shore announcements for further direction for the pair.
Overnight the US Federal Reserve decided to keep official interest rates on hold at 1.25 per cent, which was expected, as Janet Yellen failed to surprise the market indicated the Fed will begin reducing its balance sheet "relatively soon,". On the back of the Federal Reserve' monetary policy statement release the Greenback fell against a half-dozen of its major rivals. Most notably, the EUR/USD reached a 52 week high of 1.1747 while the Australian dollar also advanced to a two year high of 0.8013. Looking ahead today at the US macro-economic calendar and we will see the release of Unemployment Claims, Durable Goods and Goods Trade Balance which will continue to generate any short-term volatility in the market.
The New Zealand Dollar has rallied overnight to a two-year high against the Greenback, the pair moved swiftly after the FOMC' policy statement had more of a dovish tone which financial markets quickly reacted to moving from 0.7430 a high of 0.7489. On the data front, locally yesterday NZ Trade balance posted a fourth consecutive monthly surplus in June thanks mainly to a rise in dairy prices according to a report from the Statistics of New Zealand. Milk powder, butter and cheese groups continue to be a key export commodity, the surplus rose to 242m vs an expected increase of 150m. The NZD/USD currently changing hands at 0.7524 expect to see some volatility in the NZD/USD cross as markets digest the FOMC statement and US top tier data scheduled today.
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