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AUD / USD
0.7600 - 0.7690
The Australian Dollar opened this morning little changed when valued against its US Counterpart. During yesterday' trade the AUD/USD pair moved higher following the release of the Reserve Bank of Australia' February monetary policy statement, the decision to leave rates unchanged, saw the Aussie dollar reach an intraday high of 0.7680. The accompanying RBA statement outlined reason for optimism in their decision to leave rates on hold in anticipation of a gradual lift in growth and inflation. A quiet session expected ahead today locally with no economic data due. The AUD/USD pair is currently trading at 0.7625. We now expect support to hold on moves approaching 0.7590 while any upward push will likely meet resistance around 0.7700.
Great British Pound
GBP / AUD
1.6220 - 1.6420
The Great British Pound recovered some of its earlier lost ground against the US Dollar posting a high of 1.2546 up 1.5% on the day as Kirsten Forbes an external member of the Bank' Monetary Policy Committee (MPC) said that that an interest rate rise could be warranted. She believes that there is some evidence that inflation was starting to pick up faster than expected and there was little sign that the economy was about to worsen. Another MPC member is due to speak later today along with the Bank of England Governor on Thursday, further hawkish comments could provide near-term support for the cable around levels of 1.2260.
USD, EUR, JPY
The US Dollar Index (DXY) has regained some of this week' losses climbing 0.45% and strengthening against the majority of major currencies in overnight trading. No news out of the White House regarding expected pro-growth policies caused the Dow Jones to drift lower after continuing its run to all-time highs with 10-year yields below 2.40%. Federal Reserve Bank President Patrick Harker believes the March Central Bank meeting is still live and an interest rate hike is possible. He advised he is currently supportive of three hikes this year. USD/JPY managed to find support at 111.90 with movements back into the US Dollar, we find the cross regain its momentum and opens at 112.30. Turning our attentions across to the Eurozone, German industrial production put out a disappointing reading turning sharply by 3% for the month of December triggering a EUR sell off below 1.07 against the US Dollar.
New Zealand Dollar
NZD / USD
0.7210 - 0.7370
The New Zealand Dollar rallied more than half-a-cent intraday from 0.7315 to 0.7368 as long-term inflation expectations for local businesses rose in the final quarter of 2016. In a report released which is closely tracked by the Reserve Bank of New Zealand the anticipated inflation rate came in at 1.9% over the next 2-years and sits close to the RBNZ' target of 2%. The survey does fuel expectations of a rate rise by the Central Bank this year but is largely expected to hold this Thursday at 1.75%. Despite a 1.3% advance in the Global Dairy Trade Price Index offshore comments regarding interest rate hikes made by the U.S Federal Reserve President Patrick Harker saw the Kiwi reverse gains falling to a low of 0.7276, he told reporters that he backed three rate hikes this year. The NZD/USD pair currently changing hands at 0.7310 at the time of writing.
0.7600 - 0.7750
Yesterday the Australian Dollar traded lower against the US Dollar on the back of weaker commodity prices and strength in US treasuries. Retail Sales data yesterday fell 0.1 per cent for the month of December. As a result the Aussie traded at a low of 0.7629 before rebounding late in the New York session. The AUD/USD pair is currently trading at 0.7662. We now expect support to hold on moves approaching 0.7630 while any upward push will likely meet resistance around 0.7695. Attentions today turn the Reserve Bank of Australia which meets for the first time in two months releasing the interest rate decision & policy statement. While it is unlikely the RBA will move on Interest Rates there' likely to be plenty of attention on the accompanying monetary policy statement.
1.6150 - 1.6320
The Great British Pound edged marginally lower through trade on Monday unable to break back above 1.25 U.S cents. Bouncing about a relatively tight range Sterling touched intraday lows at 1.2429 supported by a drop in U.S treasury yields as traders increasingly question whether or not Trump will be able to deliver on pro-growth strategies and refrain from talking down the U.S Dollar. Despite losses through the end of last week the Pound has been well supported since Prime Minister Theresa May outlined a clear and definitive path to Brexit eliminating a large portion of the uncertainty that was keeping the unit down. With little macroeconomic data on hand to drive direction politics will again govern movements throughout most of the session.
Despite a lack of major data in overnight trading the US dollar has continued its down trend as USD/JPY cross had 112 stops taken out and trades at two month lows (111.60). Stocks fell from their record levels to close 0.2% lower on the S&P 500 as the market continues to wait on Trumps administration promised pro-growth policies. Japanese Yen was the largest mover of the majors reflecting current political risks. EUR/USD was trading higher on open (1.0750) despite testing 1.07 short term support. Mario Draghi has come out overnight stating that the Euro is irreversible as he continues to defend the single currency. French presidential candidate Marine Le Pen said she would take France out of the European zone should she win the election. USD direction continues to be hampered by the cautious fed reserve tone with markets now pricing just under two rate hikes for the year and 10 year yields dropped five basis points to 2.41%. Attention turns to the land down under this morning where the RBA expects to keep interest rates on hold at 1.5%
0.7235 - 0.7380
The New Zealand dollar opens this morning little changed having held onto gains above 0.73 U.S cents. After rallying strongly to close the week the NZD maintained a relatively tight 50 point range through much of Monday' session, bouncing between intraday lows at 0.7285 and session highs at 0.7326. With little macroeconomic data on hand profit taking saw investors force the unit back below 0.73 before softer U.S treasury yields bolstered demand for the higher yielding NZD and markets carried the unit higher again. With attentions now turned to 1st quarter inflation expectations we are watching a break above 0.7355 as a marker for further upward momentum.
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.
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.
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.
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.
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.
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.
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.
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.
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
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.
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.
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.
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