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BY JOEL HOLMES

Dollar index hits six week low


Australian Dollar

AUD / USD

Expected Range

0.7600 – 0.7710

The Australian Dollar advanced against the US Dollar on Friday to a high of 0.7696 on the back of mixed US Payroll data. This week the economic calendar is jam-packed with data kicking off this morning with Retail Sales and ANZ Job Advertisements for the month of January. On Tuesday, the Reserve Bank of Australia meets for the first time in two months releasing the interest rate decision & policy statement. In addition, we will hear from Governor Philip Lowe. The AUD/USD pair is currently trading at 0.7679. We now expect support to hold on moves approaching 0.7629 while any upward push will likely meet resistance around 0.7691.

Great British Pound

GBP / AUD

Expected Range

1.6080 - 1.6350

The Great British Pound edged lower into the weekly close sliding back below 1.25 despite softer than anticipated U.S wage growth. Sterling fell four tenths of one percent through trade on Friday touching intraday lows at 1.2477 as uncertainty surrounding the Brexit process weighed heavily on currency. Profit taking after the recent rally coupled with a revolt within Parliament and a new round of court battles debating the legality of Brexit, this time disputing ballot papers raised concerns around the stability of the economy and the proposed exit plan. With politics continuing to drive direction a relatively quiet macroeconomic docket will likely pose little threat to wider movements as investors continue to react to Brexit news.

Majors

USD, EUR, JPY

Expected Range

N/A

The Final Non-Farm Payroll employment figures under President Obama produced a 227,000 increase in jobs, the highest figure in four months. While the employment figures were positive, there was also a climb in the unemployment rate to 4.8%. More importantly, wage growth was a disappointment hindering further chances of a Federal Reserve rate hike in March which has slipped to a 13% possibility after Friday night' results. Despite upbeat jobs data, the US dollar index declined for the sixth week as the market continues to be sold off on Trump trades. EUR/USD continued its climb higher chasing December highs (1.0875) and USD/JPY continues to test critical support at 112.50 as 10-year JGB yields jumped as high as 0.155% surprising markets and sending the Japanese Yen higher. Yields then eased as BOJ intervened with a special bond purchase. Bank of Japan minutes noted that inflation expectations continue to be in a weakening stage with the board voting to maintain its -0.1% interest rate on current accounts and annual bond holdings at approximately JPY 80 trillion. This week the market focuses its attention towards Australia and New Zealand as both central banks expect to keep their interest rates on hold. Along with the continued watch on new Administration policies in the United States, there will be interest in the UK this week as the final vote on Article 50 bill in the House of commons takes place.

New Zealand Dollar

NZD / USD

Expected Range

0.7240 - 0.7380

The New Zealand Dollar traded sideways intraday stuck between a 25-pip range of 0.7270 and 0.7295. Early morning saw the release of the ANZ Commodity Price Index which showed a slight drop of 0.1% for the month of January but still up 19% from this time last year, the NZD had little reaction to the news and took most of its direction offshore. The pair gradually moved higher breaking 73c against the Greenback to touch an overnight high of 0.7330 through a mixed bag of data out of the United States. The U.S department of Labour reported that the economy added 227k jobs smashing expectations for January however, the unemployment rate edged higher last month coming in at 4.8%. New Zealand observes a bank holiday today and therefore markets will wait for tomorrow' Inflation Expectations ahead of Thursday RBNZ interest rate decision.

BY MATT RICHARDSON

U.S Dollar continues weakness post FOMC announcement


Australian Dollar

AUD / USD

Expected Range

0.7560 – 0.7760

The Australian Dollar was fuelled yesterday by the largest trade balance surplus since records begin in 1971. Yesterday' reading of a $3.51bn trade surplus surprised markets, driving the Aussie through November 2016 resistance levels of 0.7620. Less likely now of a 2nd contraction in GDP figures and supporting the likelihood of our Triple A credit rating left intact, the AUD/USD topped out at 0.7696 in overnight trading and opens this morning above support at 0.7660. Attention turns to United States Non-Farm Employment figures this evening before heading into next week' RBA interest rate decision where it is expect interest rates will remain on hold for the month of February.

Great British Pound

GBP / AUD

Expected Range

1.6200 – 1.6700

The Great British Pound is weaker today when valued against its US counterpart falling overnight to 1.2525 on the back of comments made by the UK Central Bank Governor Mark Carney. The Bank of England left rates and the APP unchanged by an unanimous decision, however Governor Carney seemed a little concerned about rising inflation, while upgraded its growth forecasts for the next three years. Only one major data release overnight UK construction PMI index which hit a five-month low in January of 52.2, though still indicating modest growth, it was the weakest recording since August. The GBP/USD pair is currently at 1.2533 which is 0.97 per cent down on the previous days close. We now expect support to hold on moves approaching 1.2470 while any upward push will likely meet resistance around 1.2600.

Majors

USD, EUR, JPY

Expected Range

N/A

The U.S Dollar continued its precipitous downward slide throughout trade on Thursday as markets reacted to the Fed Reserve and FOMC' latest policy announcement while unease surrounding President Trump' protectionist trade polices escalated. Investors were left wanting following the FOMC' press statement and rate decision as expectations a possible March rate hike were all but wiped from the table. CME' Fedwatch tool saw expectations for a rate adjustment slashed from twenty to fifteen percent as the board, despite spruiking a hawkish assessment of the wider economy, offered little to promote an imminent policy change. The USD fell through 113 JPY touching intraday lows at 112.08 while the 19 nation Euro touched intraday highs at 1.0826 before paring gains. The Euro moved through 1.08 for the first time since the November 8 election on Tuesday after Peter Navarro, Trade advisor to President Trump, said the unit was grossly undervalued. Breaking resistance at 1.0830 could signal a shift in wider sentiment and prompt moves toward 1.10 and 1.12. Attentions today turn to key U.S labour market data for direction into the weekly close.

New Zealand Dollar

NZD / USD

Expected Range

0.7240 – 0.7340

The New Zealand Dollar gained nearly a full cent in yesterday' local session opening at 0.7240 post the FOMC announcement in early trading. Offshore Unemployment claims in the United States did little in market movements with the Kiwi reaching an eventual high of 0.7338 before being sold off and reversing all gains as US dollar regained its momentum to sit at 0.7290 on open. Volatility is expected to calm down today with little local data on the horizon heading into this evenings US session.

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.

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