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BY OFX

AUD trades below 72 US Cents amid light flows


Australian Dollar

AUD / USD

Expected Range

0.7180 – 0.7240

The Australian dollar has once again struggled to keep its heads above water when valued against its US Counterpart over the past 24 hours. Briefly dipping below the critical 72 US Cents mark, a lower Greenback was not enough to stop the Aussies slide on Thursday as asset classes deemed riskier in nature tracked lower across the board. Attributing the majority of the declines to an iron ore price which lost a staggering 3.8 percent the Australian dollar opens in a seemingly vulnerable position this morning at a rate of 0.7209. In what' now expected to be a period of low liquidity as markets wind down for Christmas there remains one more set of macro prints from the United States evening.

Great British Pound

GBP / AUD

Expected Range

1.6980 - 1.7100

Testing fresh one-month lows when valued against its US Counterpart the Great British Pound has come under renewed selling pressure overnight, pressure mainly applied from a raft of US Data prints. Having traded as high as 1.2378 earlier in the piece, the Sterling has since unravelled with domestic flows offering no support to the Sterling. With the holiday season now on the markets door step Current Account numbers this evening offer investors one last opportunity to trade a domestic risk event. Weaker versus the Greenback at a rate of 1.2288 the Sterling is lower also versus both the Aussie (1.7045) and the Kiwi (1.7798).

Majors

USD, EUR, JPY

Expected Range

N/A

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.

New Zealand Dollar

NZD / USD

Expected Range

0.6880 – 0.6930

Trading between a low of 0.6887 and a high of 0.6925 when valued against its US Counterpart, the New Zealand dollar picked up some marginal gains versus the world' reserve currency overnight as data prints from the world' biggest economy painted a mixed economic picture. Whilst demand for the Greenback did soften, trading conditions over the past 24 hours have remained light with investors instead preferring to sit on the sidelines given the lack broader participation. Overshadowing a positive GDP print locally yesterday which showed New Zealand' economy expanded by 1.1 percent during the third quarter of this year, flows through to the end of 2017 remain set to be dominated by the performance of the Greenback. Stronger the Kiwi currently buys 69.04 US Cents.

BY OFX

USD edges off 14 year highs but is the Aussie poised for deeper losses


Australian Dollar

AUD / USD

Expected Range

0.7170 – 0.7340

The Australian dollar offered little to excite investors through trade on Wednesday failing to make significant inroads into last week' losses and struggled to break outside a tight 40 point range. Touching intraday lows at 0.7241 the Aussie remains well supported on moves approaching 0.7230 however deeper downward corrections remain possible as a bearish trading bias appears to be forming. Concerns surrounding U.S and Chinese relations and the possible introduction of protectionist trade policies are weighing heavy on the AUD as Australian resources remain a key link in the Chinese supply chain. Further, expectations strong U.S growth and tighter monetary policy continue to promote U.S Treasury Yields and a bullish Greenback. With little macroeconomic data on hand today attentions turn to the U.S economic docket for direction amid thin holiday trading.

Great British Pound

GBP / AUD

Expected Range

1.6950 – 1.7150

The Great British Pound remained relatively range bound through trade on Wednesday struggling to break above 1 month lows in thin trading conditions. Having remained largely immune to swings in macroeconomic indicators investors largely ignored a marginal increase in Public Sector Borrowing instead focussing on the possibilities associated with a hard Brexit. Easing concerns throughout October and November helped the Pound hold onto gains in the face of a relentless USD rally however markets and investors seemed to finally relent last week when the Fed announced projections for 3 interest rate hikes through 2017 forcing the GBP lower. Having lost near three percent in the week to Wednesday Cable currently trades at 1.2354 having touched 1.2330 overnight. Attentions now turn to Key U.S data sets and Brexit chatter with analyst looking to PM Theresa May and any indication she will divert from her planned March implementation of Article 50 and exit negotiations.

Majors

USD, EUR, JPY

Expected Range

N/A

The U.S Dollar edged lower through trade on Wednesday slipping off 14 year highs as profit taking and positioning ahead of key U.S data sets dominated directional flows. With minimal macroeconomic data and a distinct lack of central bank commentary on hand to drive sentiment the Greenback suffered technical adjustments as markets prepare for U.S GDP data, durable goods orders and the holiday season ahead. Moving back below 118 JPY the USD touched intraday lows at 117.12 while the Euro found support bouncing off 14 year lows and moved back above 1.04 to touch 1.0450. The Dollar index moved a quarter percent lower through Wednesday having touched its highest level since 2002 on Tuesday. Investor' attentions now shift to the raft of headline U.S macroeconomic indicators, while rising concerns surrounding the stability of Italian bank Monte Dei Pashchi Di Siena continue to weigh on the Euro.

New Zealand Dollar

NZD / USD

Expected Range

0.6840 – 0.6980

Much likes its antipodean counterpart the New Zealand dollar failed to mount a recovery against the week' losses and edged lower touching intraday lows at 0.6898. With little macroeconomic data on hand technical positioning ahead of Key domestic and U.S data sets dominated the directional tone and forced the Kiwi through 5 month lows. The NZD has suffered a heavy sell off in the week following the Fed' surprise monetary policy shift and move toward a tighter policy base and remains vulnerable to further downward moves as a bearish trading channel begins to open. With attentions today turning to 3<sup>rd</sup> quarter GDP number and key U.S macroeconomic indicators investors will be watching supports at 0.69 and 0.6845 for signs a deeper correction is at hand.

BY OFX

US Dollar remains in a resilient mood


Australian Dollar

AUD / USD

Expected Range

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

Expected Range

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.

Majors

USD, EUR, JPY

Expected Range

N/A

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

Expected Range

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.

BY OFX

Australian dollar hovers near six-month low


Australian Dollar

AUD / USD

Expected Range

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.

Great British Pound

GBP / AUD

Expected Range

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 &lsquo;strongest&rsquo; 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..

Majors

USD, EUR, JPY

Expected Range

N/A

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.

New Zealand Dollar

NZD / USD

Expected Range

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.

BY OFX

Aussie lower amid fears protectionist trade policies drag on China and its supply chain


Australian Dollar

AUD / USD

Expected Range

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

Expected Range

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.

Majors

USD, EUR, JPY

Expected Range

N/A

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

Expected Range

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.

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