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BY OFX

Dollar Index continues to strengthen despite thin trading volumes


Australian Dollar

AUD / USD

Expected Range

0.7140 – 0.7240

The Australian dollar enjoyed mixed fortunes through trade on Wednesday rallying throughout the domestic session as a relatively healthy commodity market forced the Aussie toward intraday highs at 0.7219. Having come under increasing pressure through trade last week the AUD looked to consolidate its position and anchor supports at 0.7140 amid concerns Chinese growth prospect will be dampened in the face of protectionist U.S trade policies. Iron Ore prices slid and renewed demand for U.S treasuries forced the Aussie back through 0.72 to touch intraday lows at 0.7164. Having broken 9 month lows the Aussie remains vulnerable to wider weakness as the juggernaut that is the USD bullish uptrend remains intact and additional Greenback gains are still in play. Attentions today turn to key supports at 0.7140 and 0.7055 as markers for wider direction while topside resistance at 0.7230/40 will likely cap any upward shifts.

Great British Pound

GBP / AUD

Expected Range

1.6950 – 1.7150

The Great British Pound edged lower through trade on Wednesday approaching new lows as pressure on key supports builds and a consolidated break below 1.2200 opens. Touching intraday lows at 1.2201 Sterling came under fire as fears surrounding uncertainties associated with Brexit negotiations plagued investors outlook and markets looked to cover positions moving into the years end. Prime Minister Theresa May appears set to trigger Article 50 in the early New Year with the view of leaving the European Union by the end of March. Touching its lowest level in two months Cable will remain under pressure as the intricacies of what a British exit mean for the wider economy play out. Attentions and direction today will again be governed by thin holiday trade and positioning ahead of the New Year long weekend.

Majors

USD, EUR, JPY

Expected Range

N/A

Despite softer housing data the U.S Dollar index edged higher through trade on Wednesday as volumes across commodities, bonds and currencies all traded below average and holiday activity remained thin. The Dollar was buoyed by weakness across both the Euro and Great British Pound as investors looked to higher yields amid a widening concern the costs of propping up Italian Banks will escalate beyond current expectations, while Brexit negotiations weighed heavily on the minds of analysts leading into the New Year. The Gap between German Bund Yields and U.S Treasuries hit historic highs as the price of German Bunds continues to increase and the gap in borrowing rates touched 235.25 basis points. This burgeoning gap in treasury yields and the promise or expectation of growth through stimulus under President Elect Donald Trump continues to drive dollar strength. Touching one week lows at 1.0373 the Euro currently buys 1.0419 as attentions turn to U.S crude oil inventories for direction through trade on Thursday.

New Zealand Dollar

NZD / USD

Expected Range

0.6840 – 0.6980

The New Zealand dollar Crept upward through trade on Wednesday bouncing of low side supports and moving back through 0.69. The Kiwi touched intraday highs at 0.6930, up half a percent as robust commodity prices and positioning into years end prompted investors to consolidate current positions and correct (to some extent) last week' heavy sell off. The NZD remains under pressure when values against the world' base currency and downside risks still loom large however the pace of the Greenbacks advance appears to be slowing. Attentions today turn to U.S macroeconomic indicators for direction amid thin volumes.

BY OFX

Markets flat, volumes thin


Australian Dollar

AUD / USD

Expected Range

0.7140 - 0.7220

During a typically uneventful holiday interrupted session yesterday the Australian dollar flat-lined when valued against its US Counterpart. Having traded to its lowest point in six months during December, a strengthening Greenback once again proved to be its downfall in lead up to Christmas with key economic indicators from the world' largest economy painting an overall optimistic picture for 2017. Slumping below the 72 US Cents mark the Australian dollar opens this morning lower as it currently buys 71.82 US Cents.

Great British Pound

GBP / AUD

Expected Range

1.7040 - 1.7150

Whilst broader moves have been very much limited over the past 24 hours, the Great British Pound has struggled to find any upward support when valued against the Greenback this month. With the Sterling' push towards recapturing ground at the 1.2300 mark failing, a push higher particularly this past week has resulted in a fading rally. With no economic announcements expected this week, it will be the role of equity markets to support sentiment as currencies drift ahead of conditions which aren’t expected to normalise until the New Year. Opening lower versus the US dollar at a rate of 1.2276, the Sterling is marginally stronger versus the Australian dollar (1.7089) and the New Zealand dollar (1.7823).

Majors

USD, EUR, JPY

Expected Range

N/A

The US Dollar advanced through trade on Tuesday buoyed by an uptick in housing data and continued expectations for tighter monetary policy throughout 2017. House prices in metropolitan areas rose at a faster pace than was expected in October, consolidating gains seen through September and underpinning suggestions the economy is on track. Moving back through 117 JPY the Greenback stopped short of ten month highs touching 117.61 while the Euro maintained a tight 30 point trading band in thin holiday trade. Despite the lack of volume the dollar' upside trajectory remains intact as investors continue to draw on expectations a Trump presidency and a renewed Washington will drive inflation and foster domestic growth. Increasing fiscal stimulus is expected to put pressure on the Fed and FOMC to raise borrowing costs at a faster pace in 2017 and that in turn is forcing treasury yields higher ensuring the Dollar remains well bid. With little of note on the docket today attentions will be turned to U.S consumer confidence numbers and a return to full trade as all markets re-open following the Christmas break.

New Zealand Dollar

NZD / USD

Expected Range

0.6840 - 0.6950

The New Zealand dollar has enjoyed a period of consolidation through the Christmas holiday period with investors still mainly favouring a shift back into the world' reserve currency. With the US dollar still sitting at a 14-year high, driven mainly by the promise of higher interest rates over the coming 12 months as well fiscal assistance from president-elect Donald Trump, consumer sentiment along with the performance of global equity markets has kept the Kiwi' value in tact amid thin trading conditions. Opening virtually unchanged the New Zealand dollar buys 68.86 US Cents.

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.

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