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AUD / USD
0.7220 - 0.7280
The Australian dollar traded between a low of 0.7222 and a high of 0.7262 when valued against its US Counterpart yesterday, following the release of minutes from the RBA' December meeting which showed that policy makers are content with leaving interest rates alone for the time being. Amid higher household debt levels triggered by record low borrowing costs there was an overall cautionary tone to the minutes recognising the need to support growth whilst also protecting real incomes. With markets expected to soon move into holiday mode, it continues to be the strength of the US dollar which weighs most on the domestic unit. Opening fractionally higher the Australian dollar buys 72.53 US Cents.
Great British Pound
GBP / AUD
1.6930 - 1.7750
The Great British Pound was caught under pressure for a second consecutive day as both the UK Prime Minister Theresa May and Nicola Sturgeon, the leader of the pro-independence Scottish National Party set out their Brexit positions yesterday. Both have very different views on Scotland' position with Sturgeon wanting Scotland to stay in the EU. The GBP/USD cross touched a low of 1.2310 before recovering back to 1.2365. On the data front, according to CBI' latest monthly Distributive Trade Survey retails sales growth accelerated in the year to December which were considered well above average for this time of year, it is however expected to slow in the year to January.
USD, EUR, JPY
The U.S dollar made fresh 14 year highs through trade on Tuesday as markets recovered from the shock attacks in Germany and Turkey and attentions returned to macroeconomic markers and central bank commentary. With little data on hand markets responded to comments from Janet Yellen, wherein the Fed Chair reiterated the FOMC' expectations for a faster pace of interest rate adjustments through 2017. The comments bolstered U.S Treasury yields and investors pushed the Euro through 1.04 to touch intraday lows at 1.0353 while the Yen gave up Monday' gains. The Bank of Japan opted to maintain the current monetary policy platform re-affirming its commitment to achieving stability across interest rates and bolstering growth. The commentary left some feeling short changed on expectations the BoJ would signal a withdrawal or scaling back of the current stimulus facilities. The Greenback moved through 118 JPY to touch intraday highs at 118.24 before profit taking saw the world' base currency move marginally lower to trade at 117.77 at time of writing. Attentions now turn to Crude Oil Inventories ahead of Thursday GDP and Durable Goods Orders as the headline markers for direction leading into the festive break.
New Zealand Dollar
NZD / USD
0.6880 - 0.6950
Aligning with a US Dollar which rose to a fresh 14-year high yesterday, the New Zealand dollar briefly slumped to a low of 0.6882, unable to keep pace with what appears to be all one way traffic at present. In line with results which were largely expected prices fell during the latest Global Dairy Trade auction overnight, further weighing on the Kiwi. Highlighting just how strong a push it has been back into the world' reserve currency, global risk settings would have otherwise provided an environment primed for a higher New Zealand dollar. Opening only 10 basis points lower the Kiwi currently buys 69.18 US Cents.
0.7220 – 0.7320
All in all doing a good job in shrugging off a statement from Treasurer Scott Morrison yesterday who announced a drop in this year' projected financial deficit from $37.1 billion to $36.5 billion, ratings agencies Fitch and Moody have been quick to re-affirm Australia' Triple-A credit rating, a move which saw the Australian dollar avoid worse case scenarios during the early parts of yesterday' session. Still a long way from the highs witnessed mid-last week up above the 75 US Cents handle, rhetoric from the US Federal Reserve overnight which noted the strength of the US labour market has however weighed heavily on the Australian dollar which currently swaps hands at a rate of 0.7249 versus its US Counterpart.
1.6930 – 1.7150
The Great British Pound has been on a downtrend against the US Dollar which was triggered in July following the UK' referendum outcome to leave the Eurozone. The Cable has lost around 18% in 5 months being one of the worst preforming majors of the year. It was quiet on the data front yesterday and therefore offshore events dictated, in a speech to US graduates Janet Yellen, the Fed Chair said the labour market in the United States was its ‘strongest’ in nearly a decade proving support to the US dollar. GBP/USD touched 1.2360 but has since recovered currently changing hands at 1.24. Tonight we see the release of CBI Realised Sales, a measure of consumer spending..
A cautious tone underpinned currency movements through trade on Monday as the US Dollar Index edged marginally higher. Rising geo-political tension saw the world' base currency relinquish gains against both the Japanese Yen and Swiss Franc while an upbeat Janet Yellen bolstered expectations the improving labour market will drive wages higher. Investors scramble toward safe haven currency assets after reports of separate attacks in Germany and Turkey emerged. Nine people have been killed and 50 wounded in Berlin as a truck careened into a crowded Christmas market while the Russian Ambassador to Turkey was assassinated by a lone gunman in an Ankara gallery. A nervousness spread through currency markets as the attacks come on the back of increased fighting in Syria and uncertainty surrounding US and China relations after China seized U.S naval drones on Friday. Slipping back below 117 and touching intraday lows at 116.57 against the Japanese Yen the USD opens lower against the haven asset as attentions turn to the BoJ and its final monetary policy announcement and statement for 2016.
0.6880 – 0.6960
Failing to provide a great deal of support to the New Zealand dollar a survey released yesterday revealed a pickup in business confidence, led mainly by the construction industry. Spending the majority of Monday' session trading below the psychologically important 70 US Cents threshold, the Kiwi has once again struggled to front up when valued against the current might of the Greenback, following some hawkish commentary delivered by US Federal Reserve Chair Janet Yellen overnight. Opening notably weaker the New Zealand dollar currently buys 69.28 US Cents.
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.
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.
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.
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.
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