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AUD / USD
0.7430 – 0.7630
The Australian Dollar moved lower yesterday failing to hold onto recent two-month highs of 76c against the greenback. Local markets were closed yesterday observing the Australia Day Public holiday and therefore saw Aussie move within a narrow range of 0.7555 to 0.7585 intraday. Once Europe and the US markets opened along came the macroeconomic data releases mostly out of the United States which pulled the AUD/USD pair lower touching 0.7521. Despite disappointing U.S jobless claims and housing sector data investor remain nervous over Trump' policies. Local data due today being Import Prices and PPI.
Great British Pound
GBP / AUD
1.6600 – 1.6800
Despite better than expected UK data overnight with the release of UK's Q4 GDP. Britain' economy grew by 0.6% for the quarter, and is now 2.2% higher over the last 12 months, compared to a forecast 2.1%. Mortgage approvals also beat expectations for the month in December, up to 43.2K against a previously revised 41.0. However the Great British Pound fell below 1.2600 when valued against the USD, falling from a from a monthly high of 1.2673, and touching an overnight low of 1.2557. The GBP/USD pair is currently trading at 1.2584. We now expect support to hold on moves approaching 1.2550 while any upward push will likely meet resistance around 1.2595.
USD, EUR, JPY
The U.S Dollar firmed against all of its major rivals as markets are responding positively to Us President Elect Donald Trump. The global equities rally continues to gather speed with the Dow Jones Industrial Average breaching 20,000 for the first time in the market's history on Wednesday night. Following the November 8 US Presidential Election the Dow is now up 9.5 per cent. On the data front yesterday weekly US Unemployment claims rose to 259K in the week ending January 21, up on the previous week of 237K. New Home sales fell to a 10-month low for the month of December, reaching a seasonally-adjusted annual rate of 536,000, below forecast 585K. Flash Services PMI recorded a strong result for the month of January up 55.1 from 53.9 in December. Attentions now turn to today' release of both Core Durable Goods Orders for the month of December, and Advance GDP for the previous quarter. This morning the US dollar is currently stronger versus the Japanese (114.68) and the Euro (1.0671).
New Zealand Dollar
NZD / USD
0.7180 – 0.7300
The New Zealand dollar jumped higher through early trade on Thursday buoyed by an uptick in 4th quarter CPI numbers. The stronger than expected increase in price pressures bolstered demand for the NZD as investors lowered expectations of a Reserve Bank move back toward an easing bias. Briefly breaking through 0.73 to touch intraday highs at 0.7301 the Kiwi met heavy selling pressure as investors looked to take profit and square positions adding a back stop behind recent USD losses. As markets looked to review USD expectations the NZD fell back through 0.7250 to intraday lows at 0.7223. As the Kiwi struggles to break resistance above 0.7290/0.73 attentions now turn to US policy uncertainty and advance GDP numbers for direction through trade on Friday.
0.7480 – 0.7580
The Australian dollar moved lower through trade on Wednesday unable to take advantage of broader USD weakness. Having touched intraday highs at 0.76 the Aussie moved sharply downward losing some 80 points following softer than anticipated CPI and Trimmed Mean CPI data. The inflation prints saw both quarterly and annual inflation fall short of expectations and leave the door open to further RBA rate cuts. The market had largely moved with the RBA and its shift toward a neutral policy stance but the drag in price pressures rekindles expectations for a reduction in rates to 1.5% throughout the 2<sup>nd</sup> or 3<sup>rd</sup> quarters. Having touched intraday lows at 0.7516 attentions turn offshore as domestic markets remain closed with traders enjoying Australia Day celebrations.
1.6500 – 1.6900
The Great British Pound rallied through trade on Wednesday touching 6 week highs against the U.S dollar as investors amend Cable expectations. Sterling surged through 1.2550 and 1.26 to touch intraday highs at 1.2625. As short term bearish outlooks ease the opportunity for a GBP risk reversal has diminished and the market now looks to Prime minister May and parliament for a clear Brexit plan. Having been forced to seek parliamentary approval on any Brexit strategy May' March deadline is being tested. However the PM has vowed to invoke Article 50 and begin exit negotiations as planned, preparing a draft exit strategy for parliament today. The details of such a plan will be closely scrutinised as investors looks to free market as a key determinant in economic and Sterling fortunes.
The U.S dollar moved through fresh 7 week lows throughout trade on Wednesday tumbling lower against nearly all major currency counterparts. Increasing concerns President Trump' focus has shifted away from pro-growth and fiscally driven expansion toward protectionist policy weighed heavily on the world' base currency. Nearing 112 JPY the USD touched 113.10 while the Euro reached intraday highs at 1.0768 and the dollar index fell more than half a percent to 99.83. Trump continues to dominate the headlines signing new executive orders to close off US/Mexican boarders while placing a temporary ban on most refugees, a clear sign he plans to deliver on key components of his “America first” rhetoric. Such isolationist policies are likely to be detrimental toward growth prospects and the market is now revising expectations for the economies and the Dollar' outlook under Trump. Attentions now turn to unemployment claims ahead of key GDP and Durable Goods numbers Friday for direction into the weekend.
0.7180 – 0.7320
The New Zealand dollar edged marginally higher through trade on Wednesday benefiting from broader USD weakness. Touching intraday highs at 0.7285 the NZD found support in a wider Greenback sell off as investors fear Donald Trump' protectionist and isolationist strategies will be detrimental toward growth and hence lower expectations for extended Federal Reserve rate hikes. Having rallied strongly throughout the year thus far the NZD could test resistance at 0.7290/0.7300 with extended moves toward 0.74. Attentions today remain with U.S political concerns while Domestic CPI numbers dominate local direction.
0.7475 - 0.7685
The Australian Dollar tested 76c intraday and again overnight against the US Dollar as a lift in risk appetite benefited the Aussie. With no local macroeconomic pieces for investors to digest, the focus turned overseas and with a mixed bag of data out of the US the Aussie managed to hold on to recent gains. US manufacturing showed an uptick however, US existing home sales had fallen more than expected for the month of December. Tier 1 macroeconomic data due for release today being Australian Q4 CPI and the Core Rate of Inflation, with expectations of the Core Rate slowing, something that may influence the RBA' next interest rate decision next month.
1.6450 - 1.6550
The UK Supreme Court ruled that Parliament approval is needed to trigger Article 50 in order to begin the divorce proceedings with the EU. Prime Minister Theresa May will need the approval of the Houses before triggering the Art. 50 of the Lisbon treaty. Following the Supreme Court ruling the GBP/USD pair fell to an overnight low of 1.2418. The GBP/USD pair is currently trading at 1.2511. We now expect support to hold on moves approaching 1.2480 while any upward push will likely meet resistance around 1.2550. The pound Sterling extended losses across the board versus both the Australian dollar (1.6510) and the New Zealand dollar (1.7273).
The U.S Dollar enjoyed mixed fortunes through trade on Tuesday. Existing Home sales for the month of December shrank further, an annual pace of 5.49 million, below the previous month 5.65M. Flash Manufacturing PMI however was slightly better than expected recording 55.1 for the month of January, up from the previous month of 54.3 in December. We also saw encouraging data out of Eurozone with both Flash Manufacturing PMI and Flash Services PMI recording better than expected macro prints, indicating a solid start to the year. Attentions turn today to Japanese Trade Balance for the month of December. The USD/JPY is currently changing hands at 113.82.
0.7140 - 0.7260
A bullish trend continued for the New Zealand Dollar yesterday against the Greenback touching an intraday high of 0.7275 briefly, a level not witnessed since November 10th. The catalyst for the Kiwi strength has been mainly thanks to uncertainty surrounding Trumps and the administration' policies surrounding infrastructure rebuilds and fiscal stimulus. Offshore data was mixed out of the US and therefore Kiwi is holding strong while uncertainty on US politics remains. NZD credit card spending due today ahead of tomorrow 4th quarter CPI which is expected to show that inflation has returned to the Reserve Bank's target band.
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.
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.
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).
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.
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