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AUD / USD
0.7230 – 0.7350
The Australian Dollar continued its downward correction through trade on Friday amid Federal Reserve inspired volatility and USD gains. Having pushed topside resistance at 0.75 in the lead up to the Fed monetary policy decision the Aussie has suffered heavy selling across consecutive sessions and relinquished more than 200 points pushing through 0.73 to touch intraday lows at 0.7278 on Friday. Having broken supports at 0.7370/80 the AUD continued lower as fears surrounding Trump' impact on China and the effect of protectionist trade policies added to bearish sentiment. With little on the docket through trade today attentions will turn to the RBA' monetary policy meeting minutes Tuesday for direction with investors watching supports at 0.7290 and 0.7230 as markers of wider sentiment.
Great British Pound
GBP / AUD
1.6950 - 1.7150
The Great British Pound staged a marginal recovery through trade on Friday levelling off and moving back through 1.2450. Having suffered heavy selling in the wake of the U.S Federal Reserve' policy announcement on Wednesday Sterling was poised for deeper downward moves as Brexit fears remain front and centre, however profit taking and a squeeze on long USD positions enable the Pound to rebuff further downward pressures. With little of note through the start of this week direction will stem from offshore indicators and Brexit commentary.
USD, EUR, JPY
Having broken fresh 14 year highs in the wake of the Federal Reserve' monetary policy announcement on Wednesday the U.S dollar moved marginally lower against a basket of major currency counterparts as profit taking took hold. Having signalled it would likely raise the benchmark interest rate three times throughout 2017 the Fed adopted a more aggressive path to tighter monetary policy than was expected and investors pushed the greenback and the Dollar index through fresh highs and intraday rallies. The speed of this rally however was prone to correction and dollar longs looked to shorten positions and take profit into a busy macroeconomic calendar and holiday period. The Euro edged back above 1.04, however the widening gap between central bank policy platforms opens the door for a move to parity and discussions surrounding expected Euro weakness into the first quarter of 2017. Political uncertainty, Brexit unknowns and dovish central bank policy platforms are weighing on the 19 nation combined unit and opened possibilities for further downside corrections.
New Zealand Dollar
NZD / USD
0.6930 - 7030
The New Zealand dollar continued lower through trade on Friday suffering further downward pressures amid USD gains and Chinese uncertainty. Moving through 0.70 and touching intraday lows at 0.6937 the NZD appeared vulnerable to deeper low side corrections as fears Donald Trump' protectionist trade policies will dampen Chinese production and manufacturing demand and subsequently move down the supply chain impacting demand for NZ commodities. With little of note on today attentions turn to Tuesday' Global Dairy Trade prices and Wednesday' 3<sup>rd</sup> quarter GDP numbers as markers for direction. Soft prints and a move back below 0.6970 could see the Kiwi extend losses into the end of the year.
0.7300 – 0.7400
Despite figures which showed 39,300 full time positons were created last month, Australia' official unemployment rate surprisingly rose to 5.7 percent during November. Taking its second leg lower in as many days the Australian dollar has suffered further losses when valued against its US Counterpart over the past 24 hours, a mixer of both poor local performance combined with an aggressive plight of capital back into the world' largest economy. Slumping to a low yesterday of 0.7337 the Australian dollar currently swaps hands a rate of 0.7356. Should the AUD be headed for a window of consolidation today, weekly losses would equate to approximately two percent ahead of another overnight session dictated by US data flows.
1.6800 – 1.6980
The Great British Pound continued its slide falling 2.5% since the US Federal Reserve' decision to increase interest rates by 0.25% on Wednesday. On the domestic front, UK retail sales were up 0.2% from the month of October suggesting consumer confident remains resilient in the aftermath of the Brexit referendum. There were no surprises from the Bank of England overnight in their December meeting as they kept interest rates on hold at 0.25% along with no change to their current asset purchasing program. The Bank of England has predicted a “slightly lower path” for Inflation levels given the overall strength of the Sterling this month and expects inflation to hit 2.7% by the end of next year. The Great British Pound retreated lower after the BOE decision to touch an overnight low of 1.2380 before recovering slightly to open at 1.2425 in early morning trading.
The Greenback strengthened yesterday when valued against a basket of major currencies, the US Dollar Index surged hitting its highest level in thirteen years. The main driver behind the force was an interest rate hike by the US Federal Reserve and in an accompanying statement signalled of further hikes in 2017. EUR/USD is once again lower buying at 1.0415 assisted by encouraging U.S data, weekly jobless claims fell by more than expected last week along with the Philadelphia manufacturing index, NY Empire State and Markit Manufacturing all coming in above forecast. USD/JPY has again soared hitting 10-month highs of 118.66 overnight, the pair has slightly retreated since but a bullish trend is still in place. The Bank of Japan will meet on December 18, and is expected to leave interest rates unchanged at -0.10%. Despite a sluggish economy, the bank has been hesitant to step in and ease policy, as negative rates have done little to kick-start economic growth or raise anaemic inflation levels.
0.6980 – 0.7060
The New Zealand dollar remained under pressure for much of Thursday' session as the US Federal Reserve continued to communicate a relatively upbeat economic assessment for 2017. Placing the US economy firmly on the recovery path, a tightening labour market along with added price pressures has policy makers believing the US economy can absorb up to three interest rates increasing over the next 12 months. In what has clearly favoured the Greenback, the US dollar has gone from strength to strength over the past two sessions, sweeping up everything in its path. Explaining the Kiwi' notable slide the New Zealand dollar lost further ground overnight slumping to a fresh low of 0.7010. Broadly weaker the Kiwicurrently buys 0.7033 US Cents.
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.
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.
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.
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.
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