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BY BRETT OTTAWA

Australian Dollar falls after the RBA monetary policy statement


Australian Dollar

AUD / USD

Expected Range

0.7500 – 0.7700

Investors were left disappointed yesterday after The Reserve Bank of Australia failed to deliver the hawkish stance on rates many had expected. Whilst keeping the official cash rate unchanged at 1.5 percent, in most part a neutralised statement followed with policy makers presenting an equally balanced argument for hiking or in fact reducing rates. Whilst making specific reference to how a stronger Australian dollar would complicate the domestic economies transition away from the mining boom, the AUD was heavily sold in the aftermath, reaching an eventual low of 0.7591 when valued against its US Counterpart. Opening this morning notably lower at a rate of 0.7603 the release of minutes from the Federal Reserve' most recent meeting this evening represents the biggest risk event of the next 24 hours.

Great British Pound

GBP / AUD

Expected Range

1.6850 – 1.7050

Majors

USD, EUR, JPY

Expected Range

N/A

Was a quiet session overnight with US traders enjoying the Independence Day holiday. Looking ahead today all attention will turn to the upcoming Federal Open Market Committee (FOMC) Minutes in the US. If the minutes are more hawkish than expected, confident that inflation will move higher, could confirm their tight monetary policy intentions lifting rates in the near future. Against the Euro overnight the Greenback edged higher reaching a high of 1.1376. The EUR/USD pair is currently trading at 1.1354. We now expect any upward push will likely meet resistance around 1.1380. The Pound Sterling also lost ground against the US dollar down to 1.2911, its lowest since last Wednesday.

New Zealand Dollar

NZD / USD

Expected Range

0.7200 – 0.7380

The New Zealand Dollar trading was light on yesterday and traded in a tight range as the United States were on holidays for Independence day. Opening Tuesday morning at 0.7292 against the US Dollar, the Kiwi traded to an intraday low of 0.7262 despite NZIER Business Confidence remaining steady in the June Quarter. Sideways movements continued to the domestic close before the latest GlobalDairyTrade Auction saw a drop in the price index by 0.4%. Despite the drop we saw little impact on the NZD/USD post auction, with an eventual pairing of losses overnight to see the New Zealand Dollar open this morning at 0.7290.

BY BRETT OTTAWA

RBA expected to keep rates on hold


Australian Dollar

AUD / USD

Expected Range

0.7600 – 0.7760

Despite a PMI number from China which showed firms had reported a slight increase in the production of new orders for the month of June the Australian dollar has struggled to consolidate its monumental gains over the past 24 hours. Losing 0.25 percent versus its US Counterpart to start the second half of 2017, underlying Greenback strength has kept any potential AUD advances well under wraps. Opening this morning marginally weaker at a rate of 0.7658, markets are expected there first dose of volatility at 11:30am as investors await the release of retail sales numbers from June. From there it will be all about the RBA who meets at 2:30pm. Whilst no change in the official cash rate is expected, any hawkish tones linked to tighter policy moving forward would again re-ignite AUD buying interest.

Great British Pound

GBP / AUD

Expected Range

1.6850 – 1.7000

Majors

USD, EUR, JPY

Expected Range

N/A

The US dollar strengthened overnight against its major counterparts. The lift in the US dollar coincided with strong US economic data, with US manufacturing activity (ISM) surging from 54.9 to 57.8, which was a three year high and expanding for the 97th consecutive month. 10-year US treasury yields rose to 2.35, which was a two-month high. The EUR/USD pair fell to an overnight low of 1.1355 after reaching a year high of 1.1445 late last week. The Pound Sterling also fell to a low of 1.2931 against the Greenback which was the lowest level in a week. With the upcoming Independence Day holiday in the US today (US markets closed) all eyes will be on Australia' May retail sales report and Reserve Bank of Australia' (RBA) July monetary policy meeting.

New Zealand Dollar

NZD / USD

Expected Range

0.7200 – 0.7380

In a session dominated by the strength of the world' reserve currency, the US dollar rose as factory data bolstered optimism surrounding the American economy. Whilst liquidity levels remained low in recognition of the July 4 US holiday, to a large extent the biggest dollar rally in two weeks caught investors off guard as recent macro strength supported the hawkish shift delivered by the FOMC last week. Unable to keep pace the New Zealand dollar touched lows of 0.7272 yesterday opening this morning lower as it currently buys 72.92 US Cents.

BY BRETT OTTAWA

Aussie continues to strengthen against the Greenback


Australian Dollar

AUD / USD

Expected Range

0.7600 – 0.7760

Powering to a high to of 0.7712 when valued against its US Counterpart last week, demand for the Australian dollar was spurred in the wake of comments made by several of the world' most influential central bankers who signalled that the days of super accommodative monetary policy settings are coming to an end. Viewed by many as a co-ordinated strategy, additional spice has been added to tomorrows RBA meeting as investors wait to see whether there will be any change in rhetoric following the hawkish stance adopted in the UK, Europe and United States. With the focus clearly on domestic macro indicators early in the week the Australian dollar opens more than one US Cent above levels witnessed at the same time last week. This morning the AUD buys 76.79 US Cents.

Great British Pound

GBP / AUD

Expected Range

1.6850 – 1.7000

Majors

USD, EUR, JPY

Expected Range

N/A

Quite a busy week ahead on the International Calendar kicking off tonight with US ISM Manufacturing Index which is expected to be quite robust. US Independence Day holiday on Tuesday and the US Federal Reserve will release the minutes from its last interest rate announcement on Wednesday. Finally, on Friday all eyes will be on the all-important non-farm payrolls report. The forecast is for the US unemployment rate to remain unchanged at 4.3%. In the Eurozone on Monday will see the release of the Unemployment rate for the month of May with expectations unemployment will remain steady at 9.3%. The EUR/USD pair is currently trading at 1.1422. We now expect support to hold on moves approaching 1.1380 while any upward push will likely meet resistance around 1.1460. The British pound is also stronger against the Greenback trading at 1.3019, its highest level since mid-May.

New Zealand Dollar

NZD / USD

Expected Range

0.7280 – 0.7380

The New Zealand Dollar continued its upward trend to end the week hitting a seven-month high of 0.7342. Opening Friday morning at 0.7296, The Kiwi was driven by a strong NZD building consent reading for the month along with bullish Chinese manufacturing data, bolstering risk on movements. NZD/USD cross this week looks to break through key resistance levels around 0.7340-0.7350 and continue its advance. Movements will be dependent on NZIER Business Confidence due to be released on Tuesday and the latest GlobalDairyTrade Auction on Wednesday. The New Zealand Dollar opens at 0.7335 against the US Dollar this morning.

BY JOEL HOLMES

Markets Driven by Central Bank Heads


Australian Dollar

AUD / USD

Expected Range

0.7575– 0.7700

Global optimism has again been spurred overnight following a raft of confidence boosting comments from a handful of the world' largest central banks. Driving the Australian dollar to its highest level since March when valued against its US Counterpart, its strength has since been well maintained as it currently oscillates around the 76.30 US cents mark. Whilst the domestic session today isn’t likely to offer many surprises, underlying shifts in the worlds reserve currency remain front and centre as investors await the release of this evenings US GDP print to see if realised economic growth sits alongside the optimistic projections being touted by policy makers.

Great British Pound

GBP / AUD

Expected Range

1.6800– 1.7000

Majors

USD, EUR, JPY

Expected Range

N/A

In a week with little heavy hitting economic releases the major currencies were driven by the Central Banks. Led by central bankers in the EU, UK and Canada, the hawkish tone across these regions signals the potential wind back of accommodative monetary support. Proving to be a catalyst in overnight markets, momentum really kicked off during the European trading session with ECB president Draghi delivering a speech with a mostly positive tone sending the Euro to a fresh 2017 high against the Greenback. Opening this morning at 1.1376, the markets continue to be bullish on the Euro despite the ECB suggesting markets misjudged Draghi' speech. Across the channel, the Bank of England' Governor Carney released a speech which markets have interpreted as primarily hawkish, back flipping on last weeks’ missive and sending the GBP higher. The positive comments coming from Europe led to the American dollar and Japanese Yen being the worst performers during the overnight session. The US Dollar Index (DXY), a measure of the dollar against a basket of currencies fell 0.39% and closed at 96.021. In JPY news, the USD/JPY currently trades at 112.28, having oscillated between a daily high of 112.34 and a low of 112.24. Markets now turn to economic data releases in the US to close out the week with GDP and Unemployment Claims being released during the American session tonight.

New Zealand Dollar

NZD / USD

Expected Range

0.7250 – 0.7350

The New Zealand Dollar is slightly higher than the Greenback up 0.4% on the day, having posted a daily high at 0.7313 and low at 0.7253. The Kiwi dollar has been on a bullish run since the middle of May despite the resurgence of the greenback. On the domestic front, investors will be watching for ANZ Bank New Zealand's business confidence survey today and building consents data tomorrow. The NZD/USD pair is currently trading at 0.7306. We now expect any upward push will likely meet resistance around 0.7320. The Kiwi is also weaker against both the Aussie 0.9591 (1.0426) and the British Pound 0.5649 (1.7700).

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