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BY BRETT OTTAWA

Trump comments still weigh heavily on USD


Australian Dollar

AUD / USD

Expected Range

0.7380 – 0.7520

The Australian dollar edged marginally lower through thin holiday affected trade on Monday. With US markets closed in observance of Martin Luther King Jnr Day liquidity remained thin and volumes light forcing the AUD into a relatively tight 30 point range for much of the day. Having rallied early, attempts to break through 0.75 were quashed as profit taking took hold and the currency slipped back toward intraday lows at 0.7459. Investors appeared content in squaring positions ahead of a week filled with frontline risk events. As politics dominates direction attentions turn to UK Prime Minister Theresa May and insights into the governments Brexit plan. Having moved back through 0.60 pence the AUD appears poised to break 12 month highs as heightened fears for a hard Brexit prompt weaker GBP rallies and heavier downward corrections.

Great British Pound

GBP / AUD

Expected Range

1.6000 - 1.6200

The Great British Pound began the week falling against the USD touching its lowest level since the "flash-crash" of mid-October. The GBP/USD pair, traded at over 30-year lows, reached an overnight low of 1.1987 before recovering back above 1.20 level. The GBP/USD is currently trading at 1.2040. We now expect support to hold on moves approaching 1.1970 while any upward push will likely meet resistance around 1.2085. Attentions now turn to Theresa May upcoming speech in which she is expected to discuss a Hard Brexit. On the data front the UK will release CPI for the month of December, which is expected to jump to 1.4%, up from the previous months reading of 1.2%.

Majors

USD, EUR, JPY

Expected Range

N/A

The US Dollar sell off slowed through trade on Monday as most investors observed Martin Luther Kind Jnr Day and enjoyed the subsequent long weekend. Edging marginally lower against the Japanese Yen to touch 113.71 and clawing back Euro losses the Greenback steadied following its worst weekly performance since the President Elects November victory. The Dollar index moved four tenths of a percent higher, however remains vulnerable to further downside. Implied volatility and options prices surged, touching fresh monthly highs and suggesting a heightened degree of nervousness within and across the market. While the soon to be incumbent Trump continues to skirt around front line policy announcements the optimism that surrounded his accession will waver, adding to risk adversity and heightened uncertainty. Politics and not economic will continue to drive direction through trade on Tuesday with attentions turning to UK Prime Minister Theresa May ahead of Friday' inauguration.

New Zealand Dollar

NZD / USD

Expected Range

0.7000 - 0.7200

The New Zealand dollar opens this morning little changed when valued against its US Counterpart at a rate of 0.7101. With US markets closed in observance of Martin Luther King Jnr Day liquidity remained thin. The New Zealand dollar however still trading near a two-month high against the British pound as fears of a Hard Brexit continue to escalate. The pair is currently trading at 1.6947 up nearly 0.5 per cent from last weeks close. Today we see the release of Real Estate Institute house sales data and the Global Dairy Trade auction tonight.

BY OFX

Australian Dollar fights back


Australian Dollar

AUD / USD

Expected Range

0.7430 – 0.7520

The Australian Dollar has made a comeback against the US Dollar recovering from half of its losses since president elect Donald Trump' shock win in November. The main catalyst behind the move is growing optimism from Australia' largest trading partner China and rising coal and iron ore prices coupled with concerns around Trump and what may eventuate once he enters Office. The local unit tested the 0.7500 handle several times last week and as Australia sees the release of consumer confidence and Employment figures in the days ahead it is likely to test these levels once ahead if not break through.

Great British Pound

GBP / AUD

Expected Range

1.5825 - 1.6325

The Great British Pound fell through 1.20 for the first time since October as fears of a hard exit from the European Union were amplified at the weekend. Prime Minister Theresa May confirmed immigration will run front and centre in any exit negotiations suggesting she would withdraw or give up tariff free trade for the ability to control cross border movement. The comments sparked a heavy GBP sell off and Sterling fell against all major currency counterparts. Opening this morning at 1.1981, its lowest level since October 7<sup>th</sup>, direction through the week will be dominated by Brexit expectations as attentions turn the PM' next address on Wednesday.

Majors

USD, EUR, JPY

Expected Range

N/A

The USD marked its worst weekly performance since November edging lower through trade on Friday as increasing uncertainty surrounding US domestic and foreign policy fuelled fears the economy would not live up to post-election optimism. The Greenback fell through 114.50 JPY marking a 2% depreciation through the week while the Euro comfortably held onto the gains above 1.06 after hitting five week lows on Thursday. The dollar index was last down at 101.190 having fallen 1% through the week. Investor' nervousness surrounding the dearth of information outlining Trump' deregulation and fiscal stimulus plans have forced a steep correction in USD expectations as markets squared positions ahead of this week' long weekend and today' observance of Martin Luther King Day. With little action through the docket attentions and direction will again be driven by shifting optimism.

New Zealand Dollar

NZD / USD

Expected Range

0.7050 - 0.7200

The New Zealand Dollar advanced against the US Dollar on Friday as political uncertainty surrounding U.S. President-elect Donald Trump' presidency continued to weigh on the worlds base currency. The kiwi rose 0.37% a daily high of 0.7144. The pair is currently trading at 0.7127. We now expect support to hold on moves approaching 0.7043 while any upward push will likely meet resistance around 0.7172. Attentions now turn to Food Price Index for December as a marker of fourth quarter inflation forecasts.

BY OFX

Waning US optimism prompts heavy USD sell off


Australian Dollar

AUD / USD

Expected Range

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

Expected Range

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.

Majors

USD, EUR, JPY

Expected Range

N/A

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

Expected Range

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.

BY OFX

Trump fails to deliver clear Stimulus outline; Greenback suffers heavy sell off


Australian Dollar

AUD / USD

Expected Range

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.

Great British Pound

GBP / AUD

Expected Range

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.

Majors

USD, EUR, JPY

Expected Range

N/A

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.

New Zealand Dollar

NZD / USD

Expected Range

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.

BY OFX

Investors nervous ahead of key Trump address


Australian Dollar

AUD / USD

Expected Range

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.

Great British Pound

GBP / AUD

Expected Range

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.

Majors

USD, EUR, JPY

Expected Range

N/A

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.

New Zealand Dollar

NZD / USD

Expected Range

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.

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