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AUD / USD
0.7530 – 0.7630
The Australian dollar maintained a relatively tight 35 point range through trade on Monday bouncing off fresh 7 week highs. Having topped out at 0.7587 the AUD traded between 0.7550 and 0.7580 for much of the session as concerns surrounding the Trump administrations ability to deliver growth promises weighed heavily on the US dollar. Renewed USD selling followed Trump' “America First” Inauguration address and attentions now turn to the first 100 days of his Presidency as a critical guiding marker of Dollar direction. Despite continued expectations the Republican will deliver fiscal stimulus and pro-growth reforms there is a growing concern the new Presidents aggressive protectionist approach will bully the Dollar lower. This uncertainty opens the door for grander AUD upside with moves through 0.76 and 0.7630 possibly extending toward 0.77. Attentions today turn again to USD sentiment ahead of 4th quarter inflation and core CPI numbers Wednesday.
Great British Pound
GBP / AUD
1.6450 - 1.6550
The Great British Pound advanced against the US Dollar on Monday on the back of further US dollar weakness as the ‘Trump Trade’ that continues to unravel. The GBP/USD pair is currently trading at 1.2523, its highest since mid- December. We now expect support to hold on moves approaching 1.2450 while any upward push will likely meet resistance around 1.2560. There is no scheduled data release from the UK today. All attentions will turn to this Tuesday, with the release of the January preliminary PMIs and the EU Membership Court Ruling.
USD, EUR, JPY
The US dollar edged lower against all of its major rivals on Monday. The greenback still weighed by comments from US President Donald Trump inaugural speech last Friday, emphasising an “America first” approach to foreign policy. The first 100 days of Trumps presidency now looms as a key maker for USD direction. US President Donald Trump overnight abruptly ended the U.S. from the Trans-Pacific Partnership accord with 11 other nations. Attentions now turn a raft of Flash Manufacturing PMI and Flash Services PMI data within the Eurozone tonight. Having opening marginally lower this morning the US dollar is softer versus the Japanese (113.04) whilst steady versus the Euro (1.0746).
New Zealand Dollar
NZD / USD
0.7120 - 0.7280
The New Zealand dollar extended its rally against the world' base currency moving through 0.72 U.S cents. Touching intraday highs at 0.7225 the NZD found renewed support in another round of USD selling as investors concerns surrounding President Trumps protectionist “America First” rhetoric weigh heavily on USD outlooks. Since Trumps first public address as President Elect there has been mounting concern the Republican will not deliver on growth promises proffered during the election campaign forcing investors to reshape USD outlooks. The NZD along with the JPY and AUD has been one of the primary beneficiaries of wider USD weakness advancing some 3.5cents through the year thus far.
0.7500 – 0.7600
The Australian dollar edged higher through trade on Friday clawing back through 0.7550 as investors dissected President Trump' inauguration speech. Trump' 16 minute address failed to proffer a clear policy outline, instead the incumbent President opted to paint broader strokes, spruiking his America first policy but failing to delve into specifics. Trump' focus on Protectionism concerned investors, as protectionism means a move away from trade agreements which are generally USD negative and this concern prompter renewed nervousness and another bout of USD selling allowing the AUD to hold onto gains above 0.75 and touch intraday highs at 0.7563. Attentions now turn to Tuesday domestic CPI inflation data for direction through the week ahead.
1.6250 - 1.6450
Last week was certainly an interesting one for the Cable, having begun under 1.200 and advancing above 1.2400 on UK Prime Ministers Brexit speech ending uncertainty around a “hard Brexit”. The Pound managed to hold on to gains ending the week at 1.2368 despite economic data from the UK reporting Retail Sales had it biggest fall in four years for the month of December. Sales across all main retail sectors declined with the heaviest coming from non-food stores, the official reading was a 1.9% fall on the previous month. The main focus for the week ahead will be investors watching out for any policy announcements from President Donald Trump as he settles into the Oval office and all eyes will be on tomorrow' Supreme Court ruling on Brexit.
Following the inauguration of Donald Trump on Friday the greenback closed lower for the week resulting in the EUR/USD pair flirting around the 1.0700 level. US President Donald Trump inherits a US dollar that' 14 percent stronger than when Barack Obama was sworn in as president eight years ago. The EUR/USD pair is currently trading at 1.0702. We now expect support to hold on moves approaching 1.0650 while any upward push will likely meet resistance around 1.0710. The USD/JPY pair closed the week marginally higher trading above 114.50. The Japanese calendar was quite light last week, however this week, we will see the release of Flash Manufacturing PMI, Trade Balance and National Core CPI.
0.7080 - 0.7180
The New Zealand dollar crept higher through trade on Friday supported by uncertainty surrounding the state and path of U.S policy reform under President Donald Trump. The Kiwi moved back through 0.7150 to touch intraday highs at 0.7176 as Trump' inauguration address failed to proffer a clear outline and policy platform when delivering on campaign promises across tax reform, infrastructure rebuilds and fiscal stimulus. Investors’ concerns that the 45th President will fail to deliver on growth have seen the USD has suffered significant selling and as a higher yielding asset in an environment of low or negative interest rates the NZD has enjoyed strong gains advancing some 3 cents in the month since Christmas. Attentions now turn to the first 100 days of the new President' tenure in a bid to obtain concrete policy plans and not just “America first” rhetoric.
0.7430 – 0.7630
The Australian dollar moved higher through trade on Thursday supported by a stable labour market report and wider USD positioning. Despite a marginal uptick in the unemployment rate labour data remained steady with some 13,000 new jobs added to the economy throughout December. After two strong months yesterday data was seen as steadying influence and suggests the economy is reasonably healthy with some slack in employment to be absorbed. Having maintained a relatively tight trading range through much of the domestic session the Aussie found support in overnight trade moving through 0.7550 and touching session highs at 0.7573. Markets appear nervous in extending USD gains ahead of today' presidential inauguration with direction hanging on a clear policy outline from the soon to be incumbent Trump.
1.6250 – 1.6450
The Great British Pound edged higher through trade on Thursday advancing six tenths of a percent and moving back through 1.23. Cable touched intraday highs at 1.2341 as investors continued to extend recent gains and recoup losses suffered through last week. Sterling has rallied strongly in the wake of Prime Minster May' Brexit address on Tuesday buoyed by the provision of a clear policy plan and path to European exit. In stark contrast investors remain wary President elect Donald Trump will fail to deliver on Fiscal stimulus, tax reform and deregulation with all eye shifting to today' Inauguration and a critical address. Failure to deliver a concise policy outline could force a deeper USD correction and renewed Cable upside.
The U.S dollar climbed marginally higher through trade on Thursday bolstered an extended string of upbeat macroeconomic data, comments from Fed Chari Janet Yellen and a somewhat dovish ECB. The USD forced the Euro back through 1.06 after ECB President Mario Draghi suggested an extended period of monetary stimulus was appropriate. Speaking in a press conference following the banks first meeting of 2017 Draghi noted that despite a jump in German inflation wider price pressures remained soft prompting the bank to maintain its negative interest rate policy. The USD advanced almost 1 percent as investors compared Draghi' rhetoric with earlier comments proffered by Fed Chair Janet Yellen, noting the clear disparity in policy paths. Having advanced to touch session highs at 1.0593 while moving through 115.50 JPY the Dollar reversed gains as investors looked to square positions leading into Friday' critical risk event and Trump' inauguration. Markets optimism lingers ahead of Trump' inauguration address however there is certainly a nervousness that the President elect will not deliver on fiscal stimulus, deregulation and tax reform. Failure to deliver a clear policy message today will likely induce further downside pressures on the world' base currency with inactivity within the first 100 days may see market digest and reverse recent gains.
0.7080 – 0.7280
The New Zealand dollar opens this morning little changed when valued against its US Counterpart at a rate of 0.7186. Having traded to an overnight high of 0.7200 the past 24 hours has been a largely uninspiring trading window for the Kiwi with investors already sitting on their hands ahead of this evening' US President Inauguration. We now expect support to hold on moves approaching 0.7107 while any upward push will likely meet resistance around 0.7254. With no local data scheduled today, traders will again be looking for offshore direction for the kiwi.
The Australian dollar edged lower through trade on Wednesday but managed to hold onto moves above 0.75 U.S cents. Renewed optimism surrounding U.S inflation expectations helped the world' base currency reverse the downward trajectory of the past 5 sessions as investors considered the merits of Trump jawboning against increasing price pressures. The Aussie dollar having touched intraday highs at 0.7564 fell more than half a cent to 0.7510 throughout trade overnight. Attentions now turn to local employment data for direction throughout the domestic session with investors keeping one eye on Friday' Presidential inauguration. U.S political fortunes and policy uncertainties have been the driving force behind the recent AUD rally and a primary directional indicator through the week and month ahead.
The Great British Pound retracted from the previous session gains and is down 1% currently changing hands at 1.2255 against the Greenback. Despite U.K jobless claims falling for the month for December and wages increasing investors are digesting PM Theresa May' Brexit plans and what that will mean for the future of the UK. It is almost certain that the UK Supreme Court will vote in favour of Article 50 which could see further gains in the GBP/USD, but as the reality of a hard Brexit returns as too will the sellers.
The U.S Dollar countered downward moves through trade on Wednesday moving marginally higher against a basket of major currency counterparts. Following five consecutive daily declines markets took stock of positions as rising U.S living costs and tightening labour market conditions bolstered or prompted heightened inflation expectations. Investors paused and considered the merits of Trumps recent jawboning against the possibility of renewed price pressures and a faster pace of monetary policy change. The Bloomberg Dollar Spot Index rallied some 0.5% while the Yen suffered as investors moved away from haven assets. The Dollar moved back through 114 JPY to touch intraday highs at 114.3050 while the Euro fell back through 1.0650. With attentions turned to Fed Chair Janet Yellen this morning the Central Bank President affirmed the Fed' commitment to a measured and gradual monetary policy amendment plan, suggesting the economy was showing signs of renewed health and growth shifting the focus back to Friday' inauguration and the incoming Trump. A fresh spout of jawboning and failure to deliver a clear policy path will only foster heightened uncertainty and possibly spur a fresh bout of USD selling.
0.7090 – 0.7210
Having lead the gains amongst the commodity currencies the session prior the New Zealand Dollar came under selling pressure during offshore trade as upbeat U.S macroeconomic data forced a reversal of recent gains. The NZD/USD moved from session highs of 0.7215 to current levels of 0.7125, a drop of 1.2%. Attention now turns to local Business NZ Manufacturing Index and Building Permits due today.
0.7480 - 0.7630
The Australian Dollar surged higher through trade on Tuesday breaking through the psychological 0.75 handle touching intraday highs at 0.7564 as comments from President Elect Donald Trump and a surge in commodities forced the USD lower. In an interview with the Wall Street Journal Trump suggested the U.S Dollar was overvalued, lashing out at China and its currency management strategies. The comments fuelled fears of a heavy handed protectionist approach and a rift between Beijing and Washington forcing investors to continue the downward USD correction. The AUD found further support in surging commodity prices. Bloomberg' commodity Index touched 7 month highs as Iron Ore and Copper largely held on to recent gains. Having broken the back of resistance at 0.75 the AUD is now poised for an extended push with stops at 0.7630 and 0.77. Attentions now turn to Fridays Presidential Inauguration for wider direction with investors positioning themselves through trade on Wednesday and Thursday. Should Trump fail again to proffer a clear policy platform then the USD remains vulnerable to deeper downside moves.
1.6300 - 1.6500
The much anticipated Brexit speech from UK Prime Minster Theresa May caused markets to rally pushing GBP/USD 3% higher to close around 1.2400. The PM confirmed that the UK will leave the EU single market when it leaves the EU but parliament would be given a vote on the final terms which eased markets. May said Britain would aim to establish its own free trade agreements with countries and impose limits on immigration which many Brits support and agree that greater control over immigration is more important than access to the single market. In other news, UK inflation hit a two-year high coming in at 1.6% vs an expected reading of 1.4% thanks mainly to a weaker pound since the Brexit vote continues to push up cost in the UK.
The U.S Dollar continued lower through trade on Tuesday touching 4 week lows following comments from President Elect Donald Trump. Sterling lead the charge against the embattled Greenback marking its largest single day rally since 1998 while the Yen extended gains through a 7<sup>th</sup> consecutive session and the Euro moved through 1.07. On returning from a long weekend North American investors scrambled to manage positions following comments from Donald Trump in the Wall Street Journal. The incoming President suggested the USD was overvalued, again lashing out a China and policy maker' currency management. The comments heightened concerns surrounding protectionist rhetoric and the optimism surrounding the new President' ability to deliver on Growth promises continues to wane; there is an overwhelming sense within the market that Trump may be spreading himself thinly across a wide range of action areas rather than focusing and seeing through specific policy platforms. As politics continues to dominate direction attentions turn to Friday' inauguration for wider medium term direction.
0.7100 - 0.7275
The New Zealand Dollar rallied one cent higher yesterday against the US Dollar from levels of 0.7100 to 0.7200. The main catalyst for the move were comments from President-elect Trump released by the Wall Street Journal saying the USD was too strong and that US companies can’t compete with China because of it. The US Dollar Index fell 0.8% to its lowest level in one month. As noted recently, any comments by Trump can easily trigger a market reaction and with the market being long USD traders are quick to sell and square up.
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