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BY OFX

Greenback lower as AUD hits one week high


Australian Dollar

AUD / USD

Expected Range

0.7170 – 0.7240

Finding around 30 basis points worth of support intraday the Australian dollar tracked back up above the 72 US Cents mark on Thursday. Bolstered by a stronger Yen and a weaker US Dollar the domestic unit has been viewed as the next best alternative over the past 24 hours as volumes in crude oil, equities and currencies all traded well below there daily averages. Reaching its highest level in more than week, the Australian dollar has clearly benefitted amid signs of profit taking as investors look to sell out of long US dollar positions. In what' shaping as a quiet end to 2016 the Aussie opens stronger buying 72.07 US Cents.

Great British Pound

GBP / AUD

Expected Range

1.6950 – 1.7050

Whilst failing to distinctively sustain a rally which would see the Sterling advance from levels close to its lowest point in two months there has been some mild upside for the Great British Pound in overnight trade. With several of the major units benefitting from a lower Greenback the Sterling' experience was a similar one, bouncing from a low of 1.2209 to reach a high of 1.2274. Holding firm at least for the time-being above the 1.2200 handle, economic and fundamental support will need to kick early in the new year should investors look to witness a more convincing recovery. Opening stronger versus the Greenback at a rate of 1.2252 the Sterling is weaker versus both the Australian dollar (1.6997) and the New Zealand dollar (1.7611).

Majors

USD, EUR, JPY

Expected Range

N/A

Rallying for a second day the Japanese Yen strengthened versus the US Dollar on Thursday after a relatively upbeat summary of opinions was released by the Bank of Japan. Signalling a moderate economic recovery the Yens appeal has been given an even more favourable edge amid speculation that the Greenback' monumental appreciation may have stretched too far. With investors preparing to close out a volatile year, fundamentals are expected to play a bigger role during January following months of positive sentiment driven mainly by Donald Trump' surprise election win. Following an overnight session void of any substantial market moves US equity markets have stalled as yields on US Treasuries hit a two week low. Temporarily halting the attractiveness of US dollar dominated assets the Yen has taken full advantage with the USD/JPY opening lower at 116.645, meanwhile the 17 nation euro is stronger swapping hands at a rate of 1.0483.

New Zealand Dollar

NZD / USD

Expected Range

0.6920 – 0.6980

Investors have continued to square up positions as the end of 2016 looms, a move which has weighed heavily on the world' reserve currency during overnight trade. Defensive and cautious sums up Thursday' mood as risk appetite waned and broader volumes remained thin. Not necessarily indicative of a reserving upward channel for the Greenback, this week has been clearly defined by a window in which investors have looked to secure already healthy gains. Trading up above the 0.6950 mark for much of yesterday' session one New Zealand dollar is currently worth 69.56 US Cents.

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.

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