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AUD / USD
0.7370 – 0.7440
The Australian dollar has been heavily sold in overnight trade as the US Federal Reserve hiked interest rates whilst also flagging up to three hikes for 2017. In a session dominated by US dollar moves, investors snapped up the world' reserve currency as policy makers delivered a slightly more hawkish outlook than many had expected. Briefly breaking below the 74 US Cents mark, the Aussie dollar has been sold off across the board as yields on US treasuries hit their highest level in more than five years. Having lost more than one US Cent overnight, the Australian dollar is set to face further challenges today ahead of a domestic labour market report. This morning the AUD currently buys 74.09 US Cents.
Great British Pound
GBP / AUD
1.6825 – 1.7050
It was a busy 24 hours for the Great British Pound leading with UK unemployment rates steady at 4.8% and remaining at an 11 year low for the month of October. UK Employment claims rose slightly for the first time in a year signalling job markets could be readjusting for the first time since the Brexit decision. Initially the Sterling rose to an intraday high 1.2725 against the US Dollar before large buying of the Greenback flowed into the market as the US Federal Reserve increased their interest rates to a range of 0.5% - 0.75% as expected. The main reading in the FOMC Statement was the guidance of a potential for three interest rate hikes next year instead of the previous two with cable falling to a low of 1.2530. This evening will be dictated by UK Retail sales before the Bank of England releases their interest rate decision where it is expected to keep interest rates on hold.
USD, EUR, JPY
As widely expected the US Federal Reserve raised interest rates by 0.25% from 0.50% to 0.75% early this morning Australian time, the Greenback immediately advanced pushing the nineteen nation currency lower from 1.0495 to 1.0660, a drop of 1.5%. The big surprise was their unexpected hawkish tone and announcing three likely rate increases next year. GDP forecasts were revised slightly higher and were more optimistic on the labour market. USD/JPY was one pair that showed gains breaking through resistance levels of through 116.00 and advancing above 117.00. On the data front, U.S retail sales came in short of expectations and in Japan the Tankan manufacturers’ index rose in October signalling a lift in sentiment among large manufacturers.
New Zealand Dollar
NZD / USD
0.7080 – 0.7180
The New Zealand dollar plunged lower through trade on Thursday losing more than 100 points following the Fed' 25 basis point rate hike and hawkish assessment of domestic growth prospects. Having touched intraday highs at 0.7240 the Kiwi suffered a heavy sell off as investors turned to the Greenback and advancing U.S treasury yields as the Federal Reserve' Open Market Committee increased their benchmark interest rate. While the move itself was largely anticipated the accompanying commentary buoyed investor confidence and prompted the rush on world' base currency. The Fed raised the pace of expected rate hikes suggesting 3 increases would be appropriate throughout 2017, up from just 2 expected hikes in September. Plunging through 0.7150 and touching intraday lows at 0.7106 the NZD sell off has seemingly leveled out with technical supports @ 0.7115 taking hold. The NZD currently buys 0.7121 U.S cents.
0.7470 - 0.7530
Keeping investors on their toes yesterday markets were greeted with a raft of economic indicators on Tuesday, the first of which revealing softer business conditions domestically. Whilst concerns over a technical recession are lurking in the background solid Chinese industrial production figures and retail sales numbers have steadied a somewhat unstable looking ship. Topping out at an eventual high of 0.7523 when valued against its US Counterpart, the Australian dollar has picked up some margin gains over the past 24 hours, opening fractionally higher at a rate of 0.7501. Whilst this evening remains jam packed with key risk events from the United States, tomorrow' unemployment read will be also be one to watch.
1.6675 - 1.7075
The Great British Pound enjoyed mixed fortunes through trade on Tuesday advancing to touch intraday highs at 1.2727. Buoyed by an uptick in inflation Sterling found support and looked to cement itself as the best performer across g-10 currencies. CPI and Core CPI inflation data showed price growth accelerated at the fastest pace for more than two years adding to recent improvements across key macroeconomic indicators. Despite low expectations following June' Brexit vote the U.K economy is largely outperforming analysts’ predictions and has seen the GBP push back recent Greenback rallies. The move however was short lived as profit taking and fears article 50 will be invoked sooner rather than later forced a heavy selloff. Sterling gave up nearly all the day' gains as key technical moving averages were tested. Breaking back through 1.27 the Pound open this morning marginally lower and trades at 1.2659 as attentions shift to today' highly anticipated FOMC and Federal Reserve Policy announcement and Tomorrow BoE monetary policy statement.
The Greenback traded within a narrow range against the Euro moving between levels of 1.0602 and 1.0667 ahead of tonight' U.S Federal Reserve Meeting. This is the first meeting since the U.S election and markets have priced in a 95% chance according to the CME Fedwatch Tool of a hike which has resulted in recent USD strength. The accompanying statement by the Fed will be closed watched and a dovish hint may lead to an unwinding of long dollar positions The Fed has indicated that it plans to raise rates gradually in 2017, but this could change once the new administration' economic policies become clearer. In other news, German ZEW economic sentiment was unchanged in December versus an expected slight increase and U.S Import and export prices fell less than expected in November, both pieces had little impact on the currency pair. Today we see the release of Japan releases the Tankan indices, with both indicators expected to show gains.
0.7170 - 0.7240
Little changed versus the world' reserve currency the New Zealand dollar has traded in a fairly tight range over the past 24 hours finding support at 0.7180 whilst running into resistance at 0.7232. Whilst reaching its highest level this year when valued against the Japanese Yen, there has been a general lack of participation during overnight trade ahead of the FOMC' two day meeting which is expected to show how quickly the Fed intends to raise rates over the next 12 months. Well supported in most-part however by positive macro flows from China yesterday the New Zealand dollar currently swaps hands at a rate of 0.7204 versus the Greenback.
0.7450 – 0.7530
In what has become a familiar trend for the Australian dollar over the past week of trade, the domestic unit once ran into some stiff resistance at the 75 US Cents mark on Monday. Ranging between a low of 0.7428 and a high of 0.7507, a surprise oil production cap which spurred heightened demand for energy and mining stocks has to date failed to stimulate a more prolonged rally for the AUD. Ahead of Wednesday night' FOMC meeting investors will firstly need to digest Asset Investment and Industrial Production numbers from China today. Opening in a stronger position the Australian dollar currently buys 74.90 US Cents.
1.6840 – 1.7000
The Great British Pound has started the week in fine fashion to test Thursday' highs of 1.27 in overnight trading. Opening the week at 1.2560 against the Greenback, the Sterling was one of the best performers as the market positions itself ahead of a busy docket this week in the UK. Starting off with this evening' release of UK annualised inflation figures with an expected higher CPI reading 1.1%. This could potentially see the Monetary Policy Committee move away from their easing cycle as inflationary pressures start to rear its head. In the short term though there is still concerns over the uncertainty of Brexit and it is expected that interest rates will be kept on hold at Thursdays Bank of England Policy Meeting.
After touching a one week low against the US Dollar last week on the back of ECB announcement the Euro gained momentum and firmed against the Greenbank hitting a high of 1.0652 overnight. The rise was thanks mainly to a jump in oil prices as investors took the view that higher oil prices will help reflate the euro-zone economy. Meanwhile in Japan data released showed Japan' October core Machinery order rose for the first time in three months, beating expectations and an encouraging sign for capital spending. USD/JPY briefly pushed above the 116 level, the first time since early February. No major economic data was released out the U.S, markets await the Fed' interest rate decision due out later this week.
0.7060 – 0.7240
The New Zealand dollar edged higher throughout trade on Monday, buoyed by rising commodity prices and profit taking ahead of the Federal Reserve' much anticipated monetary policy announcement. Crude oil prices rallied, dragging with it commodity linked currencies after Opec and non-Opec oil producers agreed to cut output throughout 2017. The NZD advanced some 80 points moving through technical barriers at0.72 and touching intraday highs at 0.7207 before selling pressures forced the Kiwi lower. With attentions now squarely focused on the FOMC and Federal Reserve there is a nervousness surrounding recent Greenback strength and its impact on future monetary policy. The rapid appreciation in the U.S dollar could promote a sense of unease within the Fed and prompt a cautious approach to future rate adjustments. With 0.72 firming as key point of resistance markets will be closely attuned to tomorrow' FOMC commentary and references to the pace of future interest rate hikes.
0.7380 – 0.7500
Absorbing some of the lowest economic growth rates witnessed in close to a decade during the third quarter of this year, the Australian dollar remained well supported for the much of last week when valued against its US Counterpart. Making several attempts to breach well-trodden resistance lines at the 75 US Cents mark, the month long rally which has engulfed global equities since Donald Trump' campaign win has continued to play into the hands of growth and commodity linked currencies that is despite the impressive rise of the US Dollar. Whilst several macro flows from Australia' most important trading partner are likely to have a profound impact on the Australian dollar early this week so too will Thursday' labour market report which remains set to be the domestic highlight. With plenty of water still set to pass under the bridge before the quieter Christmas period the Australian dollar opens marginally higher this morning at a rate of 0.7455.
1.6800 – 1.7000
The Great British Pound edged marginally lower through trade on Friday touching intraday lows at 1.2553. Investors looked to the world' base currency in the wake of the ECB' monetary policy announcement and a subsequent increased demand for U.S equities forcing Sterling toward fresh weekly lows. The move however was somewhat muted as markets appeared wary and refused to extend downward moves ahead of key FOMC and BoE policy announcements later this week. Analysts will be keenly attuned to both central banks as catalysts to force Cable outside its recent range bound trading pattern, with focus squarely on FOMC commentary and GBP macroeconomic indicators as markers to prompt hawkish BoE rhetoric.
The Euro sell off continued through trade on Friday as investors dour reaction to the ECB' extended quantitative easing program dampened demand for the 19 nation combined unit. Despite lowering the size of its monthly bond purchases the ECB extended acquisitions through December 2017 while leaving scope to raise the size of procurements should it be deemed necessary. The Dovish undertone surprised markets and forced the Euro back through 1.06 touching intraday lows at 1.0528. Investors hurriedly scrambled to adjust positions following the ECB' announcement squaring holdings ahead of the FOMC and Fed' highly anticipated rate announcement. With many analysts pricing in a rate hike this coming Wednesday the gulf between Central Bank policies appears to be widening amplifying demand for U.S treasury yields and adding support to the recent Greenback rally. Attentions this week will be squarely focussed on the FOMC and any hint as to forward monetary policy guidance and the pace of future rate adjustments.
0.7050 – 0.7180
Powered by a day on Wall Street which saw US equity markets push towards another fresh high, investors were encouraged late last week by some impressive data prints from the world' largest economy. Off the back of a Sentiment Index from the United States which notched up its highest read since January 2015, flows have and well and truly favoured the basket of currencies more generally associated with pockets deemed riskier in nature. Reaching a high of 0.7223 when valued against its US Counterpart last week, the biggest potential flare up to risk flows this week is likely to come from the US Federal Reserve who are widely tipped to raise interest rates for only the second time since the Global Financial Crisis. Opening marginally weaker the Kiwi currently buys 0.7128 US Cents.
0.7420 – 0.7520
The Australian dollar continued its upward ascendency when valued against its US Counterpart yesterday, breaking through the 75 US Cents mark for the first time in weeks. Whilst struggling to maintain levels up above this critical threshold the past 24 hours have been defined by an upbeat mood across domestic and global equity markets after the S&P 500 posted its best day since the US election. Whilst a roaring iron ore price has also lit a fire under those currencies closely linked to the commodities spectrum, given today' economic calendar is looking thin the Aussie remains set to potentially enjoy a short period of consolidation. Opening stronger versus the Greenback the Australian dollar currently buys 74.57 US Cents.
1.7450 – 1.7650
The Great British Pound suffered a second consecutive daily depreciation through trade on Thursday as investors looked to the USD and US denominated assets following the ECB' surprise QE extension. Despite rallying one percent against the 19 nation shared unit Sterling fell back through 1.26 and touched intraday lows at 1.2552 when valued against the worlds base currency. Cable came under continued pressure following a parliamentary vote backing Prime Minister May' Brexit timetable and proposed March exit disappointing those investors that hoped Brexit may be delayed. Attentions turn now to next week' CPI inflation report and wage growth numbers as key macroeconomic markers governing direction while further Supreme Court commentary surrounding the Governments right to invoke article 50 without parliamentary assent dominates investor focus through the rest of this week.
policy statement from ECB President Mario Draghi. The European Central Bank surprised markets by extending its bond buying program through 2017 and confirming that reductions to the size of monthly bond purchases are not to be viewed as tapering but merely a means of keeping borrowing costs lower for longer. The announcement keeps the ECB in the market much longer than anticipated and affirms the Bank' commitment to quantitative easing and looser monetary policy. The Euro plunged some 250 points collapsing through 1.08 and 1.07 to touch intraday lows at 1.06 as investors rushed to square positions and buy back into U.S treasury yields. With the Federal Reserve widely expected to raise rates next week yesterday' ECB announcement only serves to highlight the widening gap between central bank policy outlooks. With little of note on today' domestic docket investors will be largely focused on monitoring positions ahead of the FOMC policy announcement chasing any indications of how many rate increases may be proffered throughout next year.
0.7120 – 0.7230
Spurred on by improved risk flows, sentiment surrounding the global growth outlook was given a boost overnight after the ECB announced that it would look to taper quantitative easing efforts come next April. Whilst looking to extend its accommodative stance through to the end of this year before winding back, overall confidence levels have been high over the past 24 hours, a position clearly visible given the performance of equity markets. Having traded as high as 0.7223 when valued against its US Counterpart the Kiwi currently buys 71.76 US Cents.
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