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AUD / USD
0.7500 – 0.7700
With US equities and the US Dollar rising through the overnight session, the Australian dollar has consistently looked weaker in most past this week. Struggling to find any major areas of support up above the 76 US Cents mark, highs of 0.7632 proved relatively short-lived as investors favoured the worlds reserve currency. Spurred by an additional confirmation from the FOMC overnight that further rate hikes are expected before the end of this year. Opening well-aligned to levels seen yesterday morning, Trade balance figures locally today will be a key driver as the Australian dollar currently buys 76.04 US Cents.
Great British Pound
GBP / AUD
1.6900 – 1.7100
USD, EUR, JPY
The US Dollar advanced against all of its major counterparts overnight after the release of the Federal Open Market Committee (FOMC) Minutes. The Greenback was given a boost after most Federal Reserve members think the recent softness in inflation will have little bearing on inflation trend given inflation remains stubbornly below the central bank' goal. If inflation continues to keep falling the Federal Reserve may need to reconsider its hawkish stance on monetary policy. The EUR/USD pair is currently trading at 1.1351, down from an overnight high of 1.1368. Opening notably stronger versus the Pound Sterling at a rate of 1.2934 the Greenback is also significantly stronger versus both the Australian dollar (0.7605) and the New Zealand dollar (0.7283).
New Zealand Dollar
NZD / USD
0.7200 – 0.7380
The New Zealand Dollar once again traded in light conditions over the past 24 hours. Opening on the domestic market at 0.7285 against the US Dollar, the Kiwi remained in its present holding pattern between 0.7250 and upside resistance at 0.73. Investors focused on declining oil prices overnight, along with FOMC minutes released early this morning. There was little reaction on the NZD/USD cross post minutes as they support the gradual tightening of monetary policy. With little domestic data on the horizon the New Zealand dollar remains capped below the 0.73 handle and opens this morning at 0.7290.
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.
1.6850 – 1.7050
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.
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.
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.
1.6850 – 1.7000
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.
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.
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.
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.
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.
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