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BY MATT RICHARDSON

Greenback edges higher on expectations of tax reform


Australian Dollar

AUD / USD

Expected Range

0.7580 - 0.7680

The Australian Dollar retreated yesterday as the U.S dollar continued to benefit from US President Donald Trump and his remarks on tax reforms. The AUD/USD pair moved from 0.7684 to 0.7630 and opens this morning at 0.7645 as investors are expecting Trump will implement cuts for businesses and individuals. Markets have calmed and seem to be more at ease with Trump and what his administration will deliver which is benefiting the Greenback. Domestically NAB business confidence is due to be released today and with a strong rebound in December, the survey will be looked for clues on if this has been maintained.

Great British Pound

GBP / AUD

Expected Range

1.6250 - 1.6450

The Great British Pound edged marginally higher through trade on Monday pushing through and holding onto gains above 1.25. Continued support following last week' stronger than expected Manufacturing and Trade data saw investors ride the cable rally while the Sterling/Euro cross touched two week highs. With near term support for the pound gathering momentum markets will be closely attuned to any indicators suggesting the economy is beginning to weaken following last June' Brexit vote. The British economy has been surprisingly resolute in the face of an expected reduction and retraction of economic activity capping losses and fuelling short term relief rallies. Attentions today turn to yearly CPI numbers as key indicator in determining support and resistance. A break above 1.2575/80 could signal a stronger advance toward 1.3640 and 1.27.

Majors

USD, EUR, JPY

Expected Range

N/A

The U.S dollar edged higher through trade on Monday advancing against a group of key currency counterparts on renewed hopes tax reform will drive domestic growth prospects. As uncertainty surrounding the Trump administrations protectionist trade policies, aggressive immigration stance and nationalist diplomatic approach escalate the U.S dollar has suffered heavy selling pressure. However promises of wide reaching tax reform across both businesses and individuals are seen as a beacon of hope for markets and a signal Trump is moving toward growth focused policies. Advancing through 114 JPY the USD touched intraday highs at 114.15 before moving marginally lower while the Euro plunged half a cent moving back through 1.06 to touch intraday lows at 1.0593. Attentions today remain with political reforms while production price inflation and commentary from Fed Chair Janet Yellen drive macroeconomic direction into Wednesday' all important CPI prints.

New Zealand Dollar

NZD / USD

Expected Range

0.7140 - 0.7240

The New Zealand dollar continued its downward trend after last week' RBNZ decision to keep interest rates on hold. Despite trying to push through the 0.72 handle late in local trading, it was bullish buying on US Dollars hitting three week highs, pushing the Kiwi lower, finding eventual support at 0.7160 in early morning trading. A lack of movement and data early on this week could soon be forgotten as a number of key releases offshore are likely to dominant headlines. Locally we look to the Food Price index which forms a major part of inflationary data. Decembers reading (-0.8%) was disappointing with a bounce potential for January. We eagerly await Chinese inflationary figures released in the Asian session today along with the Fed Chair Janet Yellen meeting the new congress, giving her semi-annual testimony early tomorrow morning. The Kiwi opens at 0.7175 this morning against the greenback and is steady against the Aussie 0.9380.

BY SHAMEEM MUSA

US Dollar Index pushes higher


Australian Dollar

AUD / USD

Expected Range

0.7620 – 0.7720

As temperatures rose last week in Australia above 40c the Aussie dollar rose with it touching near three-month highs of just under 77c against the Greenback. Friday' RBA' statement showed little change in expectations and continued with a similar tone to the previous months. Australia' GDP forecasts have been downgraded around one percent lower given the weak Q3 2016 GDP outcome and the central bank's inflation forecasts were left unchanged, but it expects inflation to rise gradually through 2017 and 2018 above 2%. The RBA also mentioned in their statement that the economy is not expected to create extra jobs than what is required and the forecast for the unemployment rate to remain between 5-6 per cent. The AUD/USD pair currently changing hands at 0.7675 at the time of writing and with very little macroeconomic data due globally, the Aussie will take direction through commodities and equities today.

Great British Pound

GBP / AUD

Expected Range

1.6200 - 1.6375

The Great British Pound enjoyed mixed fortunes during trade on Friday rallying through 1.2550 before edging lower into the weekly close. Buoyed by stronger than expected Industrial production and Manufacturing output data Sterling touched intraday highs at 1.2571. The British economy has largely shrugged off suggestions it would stagnate in the wake of Britons move to extricate themselves from the wider European Union and currency flows have been largely dominated by Political expectations. General Brexit fears and a wider Greenback rally forced Cable lower as investors looked to President Trump and his promises for tax reform. Moving back through 1.2500 Sterling touched overnight lows at 1.2452 and opens this morning only marginally higher. Attentions now turn to Tuesday' all important yearly inflation print.

Majors

USD, EUR, JPY

Expected Range

N/A

The US Dollar remained broadly higher against the Euro as the pair slid to a two-week low of 1.0607 as growing concerns over the upcoming French presidential election continued to weigh on EUR/USD. Political risk is growing in the Euro region with a possibility of shock result in the election in the coming months. Meanwhile despite disappointing U.S data the US dollar index rose to 100.71 . The University of Michigan index of consumer sentiment declined to 95.7 in the preliminary February estimate which was below expectations. Meanwhile, Import Prices rose 0.4% in January which was more than expected driven by higher petrol prices, export prices rose 0.1% in line with forecasts. The Greenback remained well supported finishing the week strong as Trump said on Thursday that he would be announcing a “phenomenal” tax plan without giving any specifics. Against the Yen, the dollar changes hands at 113.60, there were no major announcements on either countries policy after President Trump and Japanese Prime Minister Shinzo Abe met in the US last week.

New Zealand Dollar

NZD / USD

Expected Range

0.7125 - 0.7240

The New Zealand dollar dropped significantly last week from a high of 0.7375. The RBNZ held the official cash rate at 1.75% as expected with no further hikes priced in through 2017. It is expected the RBNZ could move higher in 2018 should there be a boost in growth and inflation moves back to its target 2 per cent on an annual basis. Governor Wheeler announced that he would not put his hand up for another term once his current position ends in September 2017 with Deputy Governor Grant Spencer to step in. The Kiwi found support on Friday at 0.7160 and tests 0.72 on open against the US Dollar with a light on domestic docket this week. Food price index is released Tuesday morning followed by Retail sales figures on Friday.

BY JOEL HOLMES

US Dollar stronger across the board


Australian Dollar

AUD / USD

Expected Range

0.7600 – 0.7690

The Australian dollar has traded this week in a tight range between 0.7600 and 0.7700 against the US Dollar, showing strong resistance around the 0.7700 level. The AUD/USD pair is currently trading at 0.7628, having posted a daily high at 0.7663 and low at 0.7610. Attentions today turn to the Reserve Bank of Australia quarterly Statement on Monetary Policy at 11.30am AEDT, with all eyes on the RBA' upcoming forecasts for GDP and inflation. On the data front Australian housing finance figures for December will also be released at 11.30am AEDT. Chinese Trade Balance for January will be released later in the afternoon.

Great British Pound

GBP / AUD

Expected Range

1.6300 – 1.6500

The Great British Pound is weaker today when valued against its US counterpart falling overnight to a low of 1.2491 on the back of comments by US President Donald Trump regarding his tax plans. Donald Trump has promised of a "phenomenal" announcement on tax to support growth and investment in the United States. The GBP/USD pair is currently at 1.2498 which is now 0.37 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 1.2585. On the data front today all eyes will be on the release of both manufacturing and industrial production figures for the month December.

Majors

USD, EUR, JPY

Expected Range

N/A

President Donald Trump kept media outlets interested as usual and woke markets across the globe in what has been a quiet week for the US Dollar. In his meeting with Airline CEOs, Trump quoted “we are going to be announcing something over the next two or three weeks that will be phenomenal in terms of tax”. The USD then strengthened against the major currencies, DXY up 0.4% and saw the USD/JPY regain its uptrend from a low yesterday 111.75 to open this morning at 113.25. .S&P hit record highs and equities expect to open higher in the Asian session. EUR/USD reversed its recent uptrend hitting a peak overnight (1.0710), testing 1.0650 on open. The Euro could remain under pressure over the coming weeks in rising political uncertainty and a focus on fiscal policies across the Atlantic. Attention turns to China today with its release of trade balance figures along with this weekend' important summit between Japanese Prime Abe and President Trump where trade agreements is expected to take focus.

New Zealand Dollar

NZD / USD

Expected Range

0.7150 – 0.7250

The New Zealand Dollar continued to lose ground against the U.S Dollar yesterday as the Reserve Bank of New Zealand squashed any expectations of a rate hike any time soon, with suggestions the RBNZ may only rise a quarter of a percent in the next 3 years. The NZD/USD pair dropped from 0.7275 to a low of 0.7196 before the European session kicked off and eventually touched a low of 0.7171 on the back of Trump comments. The new President said in a meeting with airline CEOs he would be announcing “something” over the new two to three weeks that would be “phenomenal” in terms of tax which saw a USD rally investors jumping back onto the Greenback.

BY JOEL HOLMES

Markets calm as European political risks take focus


Australian Dollar

AUD / USD

Expected Range

0.7600 – 0.7690

The Australian dollar opened this morning little changed when valued against its US Counterpart at a rate of 0.7640. With no macroeconomic news released yesterday the Aussie dollar maintained a relatively tight trading range. On the back of US Dollar weakness, the AUD/USD pair reached an overnight high of 0.7665 in early US trade before retreating to a low of 0.7611. We now expect support to hold on moves approaching 0.7615 while any upward push will likely meet resistance around 0.7710. Attentions turn to today' HIA New Home Sales for December will be released at 11am AEDT, followed 30 minutes later by the NAB Quarterly Business Confidence survey.

Great British Pound

GBP / AUD

Expected Range

1.6350 – 1.6500

The Cable cross has bucked current downtrend to climb from support levels of 1.2480 in a tight range overnight to trade higher on open in the Asian session this morning (1.2540). The Great British Pound climbed higher as Britain' lower house of parliament passed legislation allowing Theresa May, The Prime Minister of Great Britain to allow Brexit processes to officially take place. Bank of England MPC hawkish member Kristin Forbes has stated she is wary of inflation climbing above the 2% target rate and members could start looking to shift their stance to vote for an interest rate hike earlier than expected. Retail Sales fell by 0.6% as consumers continue to cut back on spending and the British House Price Index declined by 0.9%. Sterling opens higher against the Australian Dollar 1.6400, and Kiwi as RBNZ left interest rates on hold (1.7275)

Majors

USD, EUR, JPY

Expected Range

N/A

The US Dollar index struggles to keep its head above 100 overnight in a fairy flat trading session on fx markets. The USD/JPY cross managed to climb back into the 112 region after drifting to an overnight low of 111.70 in correlation with US 10 year yields dropping for a fourth straight day and a three week low 2.34%. Wall St closed flat, S&P -0.1% for the day. Iron ore continues its rally as the Chinese market comes back post-lunar New Year and is close to 2 ½ year highs. EUR/USD paired losses overnight dropping to 1.0640 in overnight trading before recovering back to test resistance at the 1.07 mark on open this morning. Investors are turning its attention away from the US as delays in policies continue and are now focusing on political events in France in Germany. The market looks to a number of Central Bank members speaking across the world today along with Unemployment claims in the US.

New Zealand Dollar

NZD / USD

Expected Range

0.7210 – 0.7330

The New Zealand Dollar opens at 0.7250 against the U.S Dollar, 60 pips lower than this time yesterday on the back of the Reserve Banks of New Zealand' interest rate decision. The official cash rate as widely expected was unchanged at 1.75% however, in a statement released the banks governor Mr Graeme Wheeler said “Monetary policy will remain accommodative for a considerable period” hinting that interest rates could stay low for most of the coming year. He went on to mention that the outlook remains positive which is being supporting by “ongoing accommodative monetary policy, strong population growth, increased household spending and rising construction activity”. Mr Wheeler commented on the Kiwi being higher than is sustainable for balanced growth and that a decline in the exchange rate is was needed. Wheeler is due to speak in a press conference this morning.

BY JOEL HOLMES

Dollar prospers on heightened political uncertainty


Australian Dollar

AUD / USD

Expected Range

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

Expected Range

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.

Majors

USD, EUR, JPY

Expected Range

N/A

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

Expected Range

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.

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