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AUD / USD
0.7390 – 0.7540
The Australian dollar rally continued through trade on Thursday pushing through resistance at 0.7470 and breaking back above the psychological 0.75 handle. The AUD touched intraday highs at 0.7519 before profit taking forced the commodity currency marginally lower. The Australian dollar has been the best performing major currency through the year thus far buoyed by broader USD weakness. Waning optimism surrounding President Elect Donald Trump' ability to deliver concise pro-growth policies has hampered the USD upward trajectory and a spill over into Thursday trade helped extend AUD upside. With a sense of nervousness creeping into markets USD bulls are looking to correct positions, consolidate existing long positions and take profits. With little local data on hand throughout trade today attentions again turn to US sanguinity and a heavy macroeconomic docket for direction into the weekend.
Great British Pound
GBP / AUD
1.6025 – 1.6425
The Great British Pound has once again suffered under heavy selling pressures as markets reversed early gains through trade on Thursday. The GBP moved through 1.23 to touch intraday highs at 1.2315 buoyed by broad based USD weakness before escalating Brexit fears forced the beleaguered unit back below 1.22 to 1.2150. Investors are wary of extending upside gains as the threat of a hard Brexit from Europe looms ever larger. Having slipped below 1.21 for the first time since October earlier this week the door to deeper downward corrections has been opened and a consolidated move and close below this key resistance point could trigger a run below 1.20. With a dearth domestic economic docket limiting macroeconomic influence attentions today remain ongoing Brexit developments with key US data sets and waning Trump optimism guiding direction.
USD, EUR, JPY
The US Dollar sell off continued through trade on Thursday as optimism surrounding President Elect Donald Trump begins to wane. The Dollar fell to five week lows suffering losses against a basket of major currency counterparts moving through 114 JPY to touch session lows at 113.80 while the Euro rallied through 1.06 and 1.0650 to touch intraday highs at 1.0680. Investor' disappointment over Trump' failure to offer any insight into his plans for tax reform, fiscal stimulus and deregulation left investors wanting and questioning whether the Republican president would push through the pro-growth campaigns promised along the election trail. The lack of policy detail encouraged investors to look to safety plays and other high yielding asset classes compounding the recent USD sell off. Attentions now turn to a heavy macroeconomic docket and continued swings in optimism for direction through trade on Friday.
New Zealand Dollar
NZD / USD
0.7030 – 0.7190
The New Zealand dollar rallied through trade on Thursday surging through 0.71 U.S cents as broader Greenback weakness forced investors to correct USD holdings. With little domestic data on hand to drive direction the Kiwi took advantage of waning optimism surrounding President Elect Donald Trump and his ability to deliver pro-growth policies when in office. Touching intraday highs at 0.7144 the NZD has broken through key resistance at 0.7030 and 0.7133. A consolidated push above 0.7130 could open moves toward 0.7190 and 0.7200 as attentions turn to a heavy U.S macroeconomic docket and continued fluctuations in optimism for direction through trade on Friday.
0.7350 – 0.7490
The Australian Dollar advanced against the US Dollar on Wednesday to its highest level since December 14th, reaching 0.7471 before settling around 0.7450. Trump' first press conference since winning the November 8 presidential election disappointed the market over a lack of fiscal policy prompting a USD sell off. The pair is currently trading at 0.7447. We now expect support to hold on moves approaching 0.7425 while any upward push will likely meet resistance around 0.7480. A quiet session expected locally with little to no economic data due. Attentions now turn to key Federal Reserve commentary and US Macroeconomic data sets ahead of Chinese Trade data on Friday.
1.6275 – 1.6575
The Great British Pound enjoyed mixed fortunes through trade on Wednesday touching fresh 3 month lows before bouncing higher. Sterling moved through 1.21 for the first time since October as investors emboldened by heightened fears of a hard Brexit continued to dump the beleaguered unit despite an uptick in domestic manufacturing production. A larger than anticipated trade imbalance saw Cable touch intraday lows at 1.2048, a clear break below support at 1.21. However politics and not economics continues to drive Sterling fortunes and President Elect Donald Trump' failure offer any clear insights into what stimulus may be provided and when such plans may be implemented forced the USD lower. The lack of direction clouds interest rate expectations and prompted a heavy USD sell off helping Sterling move back through 1.22 to touch 1.2266. With little of note on the local docket attentions today turn to key commentary from Fed officials and Fed President Janet Yellen.
A lack of any meaningful fiscal policy rhetoric in President-elect Trump' press conference this morning weighed on the US Dollar index down -0.25% against a basket of major currencies. The Mexican Peso hit all-time lows and USD/JPY plummeted from an intraday high 116.75 to an eventual low 114.25 in the American trading session. 10 year treasury yields fell to 2.34% for one month lows with equities flat and WTI oil prices trading higher by 3.5%. The Euro advanced higher testing the 1.0620 resistance levels with further movements expected on Thursday as the European Central Bank releases its December policy minutes with expected focus on its decision to reduce their monthly monetary asset purchases from 80 to 60 Billion Euros. The market continues to focus on Fed reserve members speeches this week along with a raft of US data releases over the next 48 hours.
0.6960 – 0.7140
The New Zealand made a strong comeback versus the US Dollar yesterday lifting the currency pair through psychological levels of 0.7000 to touch a four-week high of 0.7085. It first began during Asian trade as the NZD/USD was supported by a rebound in commodity prices coupled with higher Asian equities. As the US session began, at first the pair pulled back on the back of anticipation of President-elect Donald Trump' first press conference with investors expecting Trump to discuss business affairs but rather it was dominated by allegations of compromising material, this quickly saw trades unwind and the Kiwi benefiting. Today we see the release of tier 3 ANZ Commodity Prices which is not expected to shake things too much.
0.7300 - 0.7400
The Australian dollar bounced within a relatively tight trading band throughout Tuesday holding onto recent gains and consolidating moves above 0.73U.S cents. Wider USD weakness enable the AUD to touch intraday highs at 0.7384 as investors looked to sell down Greenback holding ahead of upcoming risk events. President Elect Donald Trump is due to conduct his first news conference prompting nervousness across financial markets. There is a wider concern the Republican will take a hard line approach to trade policy and relations with China while tapering down the high level of fiscal stimulus promised throughout the electoral campaign. The AUD has enjoyed strong gains through the first part of 2017 as investor' square positions and the pace of the USD' upward rally stalls. Having broken resistance at 0.7290 and 0.7350 analysts are looking to a consolidated move beyond 0.7395 before pushing back toward the psychological 0.75 handle.
1.6450 - 1.6650
The Great British found support through trade on Tuesday bouncing on moves approaching 1.21. Having suffered heavy selling following comments from Prime Minster Theresa May and German Chancellor Angela Merkel at the weekend Sterling moved back through 1.2150 to touch 1.2170. Wider USD weakness ahead of President Elect Donald Trump' first press conference today prompted a Greenback sell off. Nervousness surrounding trump' stance on China and Trade policies saw investors take profits and consolidate USD longs ahead of the political risk event. Attentions today turn to the President Elect while Bank of England Governor Mark carney Testifies to U.K Parliaments Treasury Committee. With inflation expected to overshoot the BoE' 2% target Carney could well suggest a shift away from the current easing platform is on the table thus bolstering demand for the GBP, while an uptick in Manufacturing and Industrial activity will consolidate a recent recovery in the outlook for growth and heighten calls for a move away from the current easing cycle. Should Cable make another failed attempt at breaking through 1.21 we could see a considered rebound and move back toward the first point of technical resistance at 1.2270/1.2300.
Commodity prices were the talk of the town in China during Tuesday' trading session as we saw movements in coal and iron ore rally up to the capped daily limit of 8%. In further signs of renewed strength by the 2nd largest economy, Chinese producer prices saw a print of 5.5% up 1.6% from November and the highest reading in five years. Consumer Inflation was also steady at 2.1% with the Chinese government now targeting economic growth rates of 6.5-7% this year. Equities were supported by the rally in commodity prices, both the Nasdaq and FTSE hit new record highs, and the US Dollar coming off an intraday high of 116.30 against the Japanese Yen. Market participants continue to be cautious on their long USD positions as President elect Donald Trump speaks at his first press conference on Wednesday in New York before taking office on January 20th.
0.6940 - 0.7040
The New Zealand Dollar began the session strongly yesterday climbing higher against the US Dollar to 0.7045 but once again faced selling pressures around 0.7040. Investors continued to worry about Brexit and the impact it may have which gave support to the Greenback against a basket of major currencies. NZD/USD fell to a low of 0.6958 and with continued expectations for higher interest rates this year in the US the Kiwi will struggle short-term to break 0.7040. Light this week with macroeconomic data so any moves will be assisted by offshore events.
0.7300 – 0.7400
The Australian dollar rose on Monday mainly due to renewed weakness in the US dollar. The Aussie broke through the 0.73 level in early trade touching a daily high of 0.7373, which was the highest level since December 15. Yesterday' Building Approvals for the month of November rebounded, up by 7.0% on a monthly basis. The pair is currently trading at 0.7352. We now expect support to hold on moves approaching 0.7340 while any upward push will likely meet resistance around 0.7390. Attentions now turn to today' Retail Sales´ figures for the month of November. The forecast for the November release is for an increase of 0.4%, following a gain of 0.5% in October.
1.6350 - 1.6750
The Great British Pound collapsed against all major currency pairs through trade on Monday suffering heavy sell offs following comments from Prime Minister Theresa May. Rhetoric proffered by the PM highlighted concerns among investors the UK may lose access to the European Union' single market. May again reiterated the importance of ushering in new laws to manage immigration, suggesting she was not willing to compromise controls to stay in the single market. Sterling plunged over 1% against the USD moving through 1.22 and 1.2150 touching intraday lows at 1.2127. A hard Brexit now seems a certainty opening the GBP to further downside moves beyond support at 1.2080 and 1.20. Attentions today will again be with Brexit chatter ahead of Prime Minster May' address to parliament during question time on Wednesday.
The US Dollar Index which measures a basket of currencies against the Greenback continued its retreat overnight. The market continues to digest the uncertainty of the future relationship between US and Russia in a Trump-led America. USD/JPY declined from intraday highs in the Asian session in light trading of 117.53 to test support levels at 116.00 on open this morning. Overnight once dovish Boston Fed President Eric Rosengren remarked for the US Central bank to step up interest rate increases to curb potential inflationary pressures. Eager eyes will be watching five other Fed Policymakers give speeches this week for further news on any potential monetary policy changes. Elsewhere the EUR/USD cross was trading slightly higher at 1.0570 as the European Union unemployment rate remained steady at 9.8% and German Trade balance figures were positive. Investors turn their attention to the Asia today as Chinese CPI and PPI data is released for the first time this year with a slight downturn expected. Reminbi gains continue to put pressure on the US Dollar with officials looking to pair recent declines in December.
0.6930 - 0.7130
The New Zealand dollar staged a recovery through trade on Monday recouping losses suffered into the end of last week and moving back through 0.70 U.S cents. The Kiwi rallied as investors took advantage of a Greenback slump prompted by a reduction in wider risk appetite, a fall in U.S treasury yields and a sharp drop across U.S stocks. The NZD touched intraday highs at 0.7032 before selling pressures and profit taking forced a small pull back. Moves through 0.7030 are likely to be tested in the short term with a break and close above this level opening the door to a possible move back through 0.71 and 0.7130. Attentions again turn to wider sentiment for direction with no headline macroeconomic data on hand to drive direction.
0.7250 – 0.7350
The Australian Dollar closed the week lower when valued against its US counterpart on the back of Friday' robust US jobs report. US non-farm payrolls increased by 156,000 in December, slightly down on the 175,000 forecast, however there was a 26,000 upward revision to the previous months’ job gains. The Aussie pulled back from a weekly high of 0.7356 falling to a low of 0.7285 during Friday evening trade. The pair is currently trading at 0.7294. We now expect support to hold on moves approaching 0.7270 while any upward push will likely meet resistance around 0.7315. Attentions now turn to today' Building Approvals and ANZ Job Advertisements.
1.6650 - 1.6850
The Great British pound relinquished much of the gains enjoyed through Trade on Wednesday and Thursday suffering heavy selling pressure Friday. The USD dollar rallied across the board through trade on Friday bolstered by a stronger than anticipated job' report. Despite a decline in the number of Jobs added to the economy average hourly earnings increased, putting pressure on wage growth and opening the door for a possible uptick in consumer driven inflation. The GBP fell through 1.23 and 1.2250 to touch intraday lows at 1.2240 as wary investors look to a Supreme Court decision on parliaments roll in Brexit negotiations for wider Pound direction in the coming fortnight. Attentions today turn to a relatively light macroeconomic calendar for direction as political uncertainties drive direction.
The US Dollar reversed its short term sell off despite non-farm payrolls missing expectations by 20,000 jobs .The release showed an increase of 156,000 jobs in the last month of 2016. Unemployment figures remained steady (4.7%) with rising wage pressures heading into the New Year. JPY was hit hardest on Friday evening trading losing 1.2% against the US Dollar and closing on the 117.00 mark. The EUR/USD uptrend paused as it pulled off resistance levels at 1.06 and will test the 1.5115 handle. Close analysis of the Trump administration takes shape this week as nominees are expected to be cleared in a Republican controlled senate. USD long trades continue to weaken as the speed of policy implementation continues to be unknown as the first policy statements draw closer. Flows will be light on Monday as Japan observes a bank holiday with close eyes on the world' second largest economy on Tuesday as China releases its inflation figures.
0.6900 - 0.7000
The New Zealand dollar relinquished hard fought gains enjoyed through trade on Wednesday and Thursday moving lower into the weekly close and slipping back below 0.70 U.S cents. Greenback selling pressure eased through trade on Friday as non-farm payroll numbers and improved wage growth showed the U.S labour market remains steady prompting calls for consumer driven inflation and additional rate hikes through 2017. The USD advanced against a series of major currency counterparts and the Kiwi suffered. With relatively strong resistance in place, moves beyond 0.7030 will likely be defended and meet selling pressures in the near term. With no macroeconomic data at hand today direction will likely stem again from U.S data sets and wider market sentiment.
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