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AUD / USD
0.7650 – 0.7750
The Australian Dollar touched a low of 0.7635 overnight against the U.S Dollar on the back of stronger than expected US macroeconomic data. A raft of realises saw the Aussie retreat as US Retail Sales, Inflation data and Empire State Manufacturing beat expectations. As Fed Chair Janet Yellen began her second day testifying before the House of Financial Services Committee markets shifted focus and saw investors take profit driving the Aussie higher and breaking key psychological resistance levels of 77c and currently changing hands at 0.7717 at the time of writing. Local economic data today sees the Employment Change and Unemployment rate, economists expect around 10k jobs to have been added to the market with the Unemployment rate holding at 5.8%
Great British Pound
GBP / AUD
1.6100 – 1.6300
The Great British Pound ended Wednesday marginally lower having recouped losses suffered throughout early European trade. A softer than anticipated expansion of wages and a flat unemployment print set Sterling on a downward trajectory breaking through 1.2450 before the selloff was compounded by upbeat U.S CPI and Retail Sales data that drove the Greenback toward 1 month highs. Touching intraday lows at 1.2390 the Pound then found support as investors looked to sell into the USD rally and took short term profits. Fed Chair Janet Yellen offered little additional insight into the timing of future rate hikes when she addressed the senate banking committee for a 2nd consecutive day, hinting rate hikes would be dependent on the impact of President trumps fiscal growth policies. Rallying back through 1.2450 to touch 1.2480 the Pound opens this morning at 1.2456 as attentions turn to Friday' Retail Sales report as the next macroeconomic marker for direction.
USD, EUR, JPY
New Zealand Dollar
NZD / USD
0.7150 – 0.7300
The New Zealand Dollar against its US counterpart moved pretty much in line with AUD/USD showing that both pairs took direction from offshore events. The NZD/USD initially dipped from 0.7195 to 0.7145 as the data sparked speculation that the Federal Reserve may increase interest rates as early as March. The Fed commented that they will “evaluate whether employment and inflation are continuing to evolve in line with these expectations” and that “further adjustment of the federal funds rate would likely be appropriate”. The commodity based currency rallied with profit takers jumping in driving the Kiwi to an overnight high of 0.7228 and currently trading at 0.7220 at the time of writing.
0.7620 - 0.7720
The Australian dollar opens this morning marginally lower having enjoyed mixed fortunes throughout trade on Tuesday. Moving higher throughout the domestic session the AUD rallied through 3 month highs after an NAB report showed business confidence grew at a faster rate than expected in January while Chinese inflation data surpassed expectations. Touching 0.7696 the Aussie then suffered heavy selling pressure relinquishing all daily gains and moving through 0.7650 to intraday lows at 0.7620. Comments from Janet Yellen drove the Greenback higher as the Fed Chair proffered an upbeat assessment of future rate hikes and lay the groundwork for three monetary policy adjustments throughout 2017. Having found support on an approach toward 0.76 the AUD recovered some of the evening' losses and opens this morning buying 0.7654 U.S cents. Attentions now turn to domestic Consumer Sentiment ahead of Key U.S inflation data and tomorrow' employment prints.
1.6200 - 1.6375
The Great British Pound suffered a sharp and sudden sell off Tuesday falling back through 1.25 U.S Cents and touching 2 week lows at 1.2449. A softer than expected year on year inflation print prompted investors to sell down Sterling on expectations the Bank Of England may looked to extend its stimulatory monetary policy platform. Softer price belies expectations the BoE may need to raise rates to combat escalating inflation as the weaker GBP forces imports higher and investors subsequently adjusted positions following the weaker than anticipated data release. Attentions now turn to unemployment data and wage growth as another key marker future inflation pressures.
The U.S Dollar enjoyed mixed fortunes through trade on Tuesday advancing early before relinquishing gains into the daily close. US Federal Reserve chair Janet Yellen gave a fairly upbeat testimony to the Senate Banking Committee. As long as the US economy continues to show signs of strengthening the Federal Reserve will look to continue to hike interest rates. The market now pricing in a forty-five percent chance of an interest rate hike next month. On the back of this hawkish tone the US Dollar advanced to a three-week high against a group of key currency counterparts. A busy calendar ahead tonight in the US with the release of CPI, Retail Sales, Industrial Production for the month of January. The EUR/USD pair is currently trading at 1.0576. We now expect support to hold on moves approaching 1.0520 while any upward push will likely meet resistance around 1.0625.
0.7125 - 0.7240
The New Zealand dollar traded in a narrow range in the local trading session yesterday (0.7170 – 0.7200) against its US counterpart as an increase in January food prices 0.9% saw little movement in currency markets. With the food price index having a 19% weighting on the CPI index, it is expected this could now cement an acceleration in annual figures above the current 1.2% reading in Q4 2016. Janet Yellen' semi-annual testimony overnight saw the Kiwi drop immediately fifty basis points to a low of 0.7135 with a March Fed Reserve interest rate hike still on the table. Across the Tasman, the Australian dollar fared better with a jump in NAB business confidence pushing the Kiwi lower from 94.00 Australian cents yesterday morning to 93.60 Australian cents on open. The Kiwi has recovered slightly to 0.7165 this morning against the greenback and the market looks to overnight readings of US CPI and retail sales.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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