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BY SHAMEEM MUSA

FOMC hold steady on interest rates


Australian Dollar

AUD / USD

Expected Range

0.7480 – 0.7690

The Australian Dollar see-sawed during yesterday' day of trade and once again came within an inch of 76c against the Greenback overnight posting a high of 0.7596 and a low of 0.7550. The AiG performance of manufacturing index fell in the month of January to 51.2 however, still above 50 and signalling an expansion. Meanwhile, offshore, the Federal Open Market Committee (FOMC) released their interest rate decision and as widely expected the Committee kept current interest rates on hold at 0.50% - 0.75%. The statement showed no major changes or surprises. Investors will now turn to today' domestic Trade Balance and Building Approvals due at 11:30 AEST

Great British Pound

GBP / AUD

Expected Range

1.6575 – 1.6750

The Great British Pound was the pick of the majors overnight supported by a favourable PMI reading for the first month of the year. Manufacturing output grew at the fastest pace since May 2014 as new order intakes expanded. The Pound continued its march against the US Dollar as a leaked report to the media stated that if Britain does not secure a workable deal then both the UK and European Union will be mutually damaged. Grounding to a low in the Asian session of 1.2550,the Sterling managed to trade as high as 1.2675 in overnight trading ahead of this evenings Bank of England' monetary policy meeting. It is widely expected that interest rates remain on hold at record lows of 0.25% with the potential for an improvement in growth and inflation outlook for the year of 2017 and beyond.

Majors

USD, EUR, JPY

Expected Range

N/A

Despite upbeat U.S economic releases the Greenback failed to hold on to gains made earlier in the session against the Euro seeing EUR/USD test levels of 1.8010 again. The ISM manufacturing data rose from 54.5 in December to 56.0 in January supporting optimism in the manufacturing sector. Also, ADP payroll non-farm employment data rose by 246,000 last month, smashing expectations of an increase of 165,000. The Greenback came under pressure as the FOMC kept rates on hold noting that “Measures of consumer and business sentiment have improved of late” along with “Job gains remain solid and the unemployment rates stayed near records lows”. In other news, Eurozone manufacturing PMI data hit a 69-month high at the start of 2017 marking improved business conditions.

New Zealand Dollar

NZD / USD

Expected Range

0.7230 – 0.7330

The New Zealand dollar enjoyed mixed fortunes throughout trade on Wednesday closing marginally lower on the day having recouped early losses. Softer than anticipated labour market data saw the NZD succumb to selling pressures throughout the domestic session retracing recent gains beyond 0.73 and moving back through 0.7250 as stronger U.s jobs data and factory growth compounded losses. Touching intraday lows at 0.7243 the Kiwi found support and rallied after the FOMC and Fed Reserve elected to leave rates on hold while signalling a March rate hike is unlikely. Reversing much of the day' early losses the Kiwi met resistance on moves approaching 0.73 and currently buys 0.7278 U.S cents. Attentions now turn to U.S unemployment claims and Non-farm payroll numbers Friday for direction into the weekly close.

BY SHAMEEM MUSA

Broad USD weakness on Trumps administration comments


Australian Dollar

AUD / USD

Expected Range

0.7480 - 0.7690

The Australian Dollar for the month of 2017 has rallied over 5% thanks mainly to a new President taking office in the United States which is weighing on risk sentiment. The Aussie remained within a 30 pip range intraday between 0.7543 and 0.7572, most of its move happened offshore with the Aussie edging higher once again with comments from the Trump administration. This time Donald' top trade advisor Peter Navarro had accused Germany of currency exploitation which German Chancellor Angela Merkel said the country had no influence over the euro exchange rate. The US Dollar came under selling pressure and moved 50 pips higher to touch 0.7603 before consolidating around current levels of 0.7586 at the time of writing. Attentions now turn to US macro releases with ADP Non-Farm payroll and FOMC minutes.

Great British Pound

GBP / AUD

Expected Range

1.6500 - 1.6700

The Great British Pound enjoyed mixed fortunes through trade on Tuesday initially falling to a fresh low for the session of 1.2411, however on the back of US President Donald Trump and his top trade adviser making comments about other countries' devaluations of their currencies, the Pound surged in afternoon trade to 1.2593 against the Greenback, helping it record its best January in six years. On the domestic data Net Lending to Individuals for the month of December grew at the slowest pace in five months. Mortgage approvals also for the month of December was up by 68,000 in the month, but below the expected forecast of 69,000. Attentions now turn to today' Manufacturing PMI and should indicate a slowdown in Manufacturing activity. The GBP/USD pair is currently trading at 1.2578. We now expect support to hold on moves approaching 1.2460 while any upward push will likely meet resistance around 1.2580.

Majors

USD, EUR, JPY

Expected Range

N/A

The Euro was higher against the Greenback touching a high of 1.0810 as a raft of data was released out of the Eurozone. January CPI spiked close to a four-year high of 1.8%, this level is close to the European Central Banks target of 2% and the data supports expectations of headline inflation to continue rising in the coming quarters. The unemployment rate for the zone also fell to 9.6% last month vs 9.7% in November and Q4 GDP came in line with expectations growing at 0.5% in the last 3 months. In other news, there was a batch of Japanese data releases which included the Bank of Japan policy rate remaining unchanged at 0.10% and the unemployment rate also unchanged at 3.1%. USD/JPY slightly lower at 112.85 at the time of writing.

New Zealand Dollar

NZD / USD

Expected Range

0.7250 - 0.7380

The New Zealand dollar having maintained a relatively tight trading range throughout much of its domestic session enjoyed strong gains overnight following fresh commentary from U.S President Donald Trump. The NZD rallied through 0.73 touching intraday highs at 0.7349 after the Republican again commented on China' currency devaluation while Whitehouse adviser' suggester the Euro was also being unfairly undervalued. The comments forced a rapid USD sell off as market fears the Trump administration is bidding to talk down the dollar escalated. Holding onto gains above 0.73 the Kiwi buys 0.7336 U.S cents at time of writing as attentions now turn to the FOMC and Federal Reserve for commentary and an update on monetary policy expectations.

BY MATT RICHARDSON

Politics dominates direction again as Trump effect sends USD lower


Australian Dollar

AUD / USD

Expected Range

0.7480 - 0.7590

The Australian dollar maintained a relatively tight 40-point range through trade on Monday amid several holidays in Asia. Chinese markets will be closed for the week due to the New Year holiday. While the Aussie did little against the US dollar, it rose against the Euro (0.7061) and British pound (0.6051). Attentions today turn to today' private sector credit figures and NAB Business Confidence for the month of December. The AUD/USD pair is currently trading at 0.7552. We now expect support to hold on moves approaching 0.7490 while any upward push will likely meet resistance around 0.7610.

Great British Pound

GBP / AUD

Expected Range

1.6425 - 1.6625

The Great British Pound edged lower through trade on Monday failing to take advantage of broader USD weakness. Moving below its 100 day moving average investors looked to square positions selling down recent gains and moves back toward 1.26. Cable fell through 1.25 to touch intraday lows at 1.2467 suggesting a turn in the recent upside support and perhaps an indication of wider weakness. A consolidated break below the 200 day moving average and 1.2465/70 could signal a deeper sell off is at hand. With attentions squarely focused on Brexit plans and U.S policy changes politics will again drive direction through trade on Tuesday.

Majors

USD, EUR, JPY

Expected Range

N/A

The Greenbacks downward spiral resumed on Monday as investors continue to react to President Trump' aggressive protectionist policies. Falling against the Japanese Yen and Swiss Franc investors sold down USD holdings following the introduction of tough new immigration executive orders banning refugees from specific Muslim countries. The order highlights trumps push to control immigration and protect U.S interest. In his first week in office Trump has failed to deliver of Fiscal reform or stimulus heightening concerns the new President will be unable to deliver the level of growth promised throughout the election. Falling through 113.50 JPY attentions now turn to The Bank of Japan and FOMC for short term direction. While both central banks are expected to maintain their current policy platforms all eyes will be on the Fed and its accompanying policy statement for clues as to whether the board expects newly proffered policies will affect its path to tighter monetary conditions.

New Zealand Dollar

NZD / USD

Expected Range

0.7230 - 0.7330

The New Zealand dollar extended its rally against the world' base currency moving through 0.7250 U.S cents as optimism grows about the outlook for the New Zealand domestic economy. The kiwi dollar has now traded above 72 US cents for a week and has been helped by expectations the Reserve Bank of New Zealand will begin raising interest rates this year. The NZD/USD pair is currently trading at 0.7285. Attentions now turn to today' Visitor Arrivals data for December and Wednesdays labour market data which may show the jobless rate held below 5 per cent.

BY MATT RICHARDSON

Lacklustre US GDP growth boosts emerging market and high yield currencies


Australian Dollar

AUD / USD

Expected Range

0.7480 – 0.7630

The Australian dollar edged higher through trade on Friday finding support on moves toward 0.75 despite wider USD gains. Advancing two tenths of one percent to intraday highs at 0.7572 the AUD found support in softer than anticipated US GDP numbers. American Growth Domestic Product increased at an annual rate of 1.9 percent in the fourth quarter, its slowest pace of growth in 6 years. The dour print dampened some investor' expectations surrounding the pace and timing of future Federal Reserve rate hikes. The Aussie is holding onto recent gains without extending beyond 0.76. A move and consolidated close above 0.7630 could signal and extended run higher while a move back below 0.75 may prompt further selling. Attentions today turn to a relatively quiet economic docket with direction continually driven by reactions to President Trump' ever changing political landscape.

Great British Pound

GBP / AUD

Expected Range

1.6420 - 1.6720

The Great British Pound closed the week lower when valued against its US counterpart. Having touched a weekly high of 1.2672 the pound ended the session down at 1.2539. On Friday, US President Trump held a press conference with British Prime Minister Theresa May. Donald Trump has told Theresa May that 'Brexit is going to be a wonderful thing for your country'. The UK macroeconomic calendar is empty today. Attentions now turn to domestic consumer confidence numbers on Tuesday and Thursdays Federal Reserve and FOMC policy meeting. The pair is currently trading at 1.2546. We now expect support to hold on moves approaching 1.2470 while any upward push will likely meet resistance around 1.2571.

Majors

USD, EUR, JPY

Expected Range

N/A

US politics continued to dominate markets as investors remained cautious after Trump' first week in office. In total he signed eighteen executive orders with one focusing on the construction of the Mexican border wall last week proposing a 20% tax on imports from Mexico into the USA to assist in paying for the wall. The USD Index remained choppy with the Dollar being under heavy pressure since Trumps inauguration. On the data front, US economic growth slowed for the final quarter of 2016 with a downturn in exports temporarily depressed activity. US GDP grew at an annual pace rate of 1.9% vs 3.9% in the previous quarter. The contributing factor was a plunge in soybeans in Q4 having surged in Q3. The annual rate showed growth of 1.6%, which was the worst in five years. Having said this, President Donald Trump has set a goal of doubling growth to 4 percent in the coming years through an ambitious stimulus program featuring tax cuts, deregulation and higher infrastructure spending. EUR/USD seesawed touching a high of 1.0725 on the news, but failed to hold the gains and closed the week at 1.0691. The Dollar is back under the 115 handle against the Japanese Yen buying 114.64.

New Zealand Dollar

NZD / USD

Expected Range

0.7080 - 0.7180

The New Zealand dollar crept higher through trade on Friday supported by uncertainty surrounding the state and path of U.S policy reform under President Donald Trump. The Kiwi moved back through 0.7150 to touch intraday highs at 0.7176 as Trump' inauguration address failed to proffer a clear outline and policy platform when delivering on campaign promises across tax reform, infrastructure rebuilds and fiscal stimulus. Investors’ concerns that the 45th President will fail to deliver on growth have seen the USD has suffered significant selling and as a higher yielding asset in an environment of low or negative interest rates the NZD has enjoyed strong gains advancing some 3 cents in the month since Christmas. Attentions now turn to the first 100 days of the new President' tenure in a bid to obtain concrete policy plans and not just “America first” rhetoric.

BY BRETT OTTAWA

Global Equity Rally Continues


Australian Dollar

AUD / USD

Expected Range

0.7430 – 0.7630

The Australian Dollar moved lower yesterday failing to hold onto recent two-month highs of 76c against the greenback. Local markets were closed yesterday observing the Australia Day Public holiday and therefore saw Aussie move within a narrow range of 0.7555 to 0.7585 intraday. Once Europe and the US markets opened along came the macroeconomic data releases mostly out of the United States which pulled the AUD/USD pair lower touching 0.7521. Despite disappointing U.S jobless claims and housing sector data investor remain nervous over Trump' policies. Local data due today being Import Prices and PPI.

Great British Pound

GBP / AUD

Expected Range

1.6600 – 1.6800

Despite better than expected UK data overnight with the release of UK's Q4 GDP. Britain' economy grew by 0.6% for the quarter, and is now 2.2% higher over the last 12 months, compared to a forecast 2.1%. Mortgage approvals also beat expectations for the month in December, up to 43.2K against a previously revised 41.0. However the Great British Pound fell below 1.2600 when valued against the USD, falling from a from a monthly high of 1.2673, and touching an overnight low of 1.2557. The GBP/USD pair is currently trading at 1.2584. We now expect support to hold on moves approaching 1.2550 while any upward push will likely meet resistance around 1.2595.

Majors

USD, EUR, JPY

Expected Range

N/A

The U.S Dollar firmed against all of its major rivals as markets are responding positively to Us President Elect Donald Trump. The global equities rally continues to gather speed with the Dow Jones Industrial Average breaching 20,000 for the first time in the market's history on Wednesday night. Following the November 8 US Presidential Election the Dow is now up 9.5 per cent. On the data front yesterday weekly US Unemployment claims rose to 259K in the week ending January 21, up on the previous week of 237K. New Home sales fell to a 10-month low for the month of December, reaching a seasonally-adjusted annual rate of 536,000, below forecast 585K. Flash Services PMI recorded a strong result for the month of January up 55.1 from 53.9 in December. Attentions now turn to today' release of both Core Durable Goods Orders for the month of December, and Advance GDP for the previous quarter. This morning the US dollar is currently stronger versus the Japanese (114.68) and the Euro (1.0671).

New Zealand Dollar

NZD / USD

Expected Range

0.7180 – 0.7300

The New Zealand dollar jumped higher through early trade on Thursday buoyed by an uptick in 4th quarter CPI numbers. The stronger than expected increase in price pressures bolstered demand for the NZD as investors lowered expectations of a Reserve Bank move back toward an easing bias. Briefly breaking through 0.73 to touch intraday highs at 0.7301 the Kiwi met heavy selling pressure as investors looked to take profit and square positions adding a back stop behind recent USD losses. As markets looked to review USD expectations the NZD fell back through 0.7250 to intraday lows at 0.7223. As the Kiwi struggles to break resistance above 0.7290/0.73 attentions now turn to US policy uncertainty and advance GDP numbers for direction through trade on Friday.

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