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AUD / USD
Having traded either side of the 76 US Cents mark during the back end of last week, topside moves have been well and truly contained for the Australian dollar after figures on Friday showed the US economy added an impressive 222,000 new jobs last month. Whilst domestic macro events last week remained supportive of a firmer AUD, the tide has turned firmly turned in favour of the Greenback following further signs of strength within the world' largest labour market. Opening weaker this morning at a rate of 0.7597 inflation numbers from China today remain the highlight ahead of an otherwise quieter looking start to the new week.
Great British Pound
GBP / AUD
USD, EUR, JPY
The Euro continues to find support following last week' ECB minutes where they signalled that further policy tightening is to be expected as the macroeconomic conditions improve. However, there were concerns regarding how its communications could impact markets as any perception that it was moving away from stimulus policy could shake financial markets. The minutes also emphasised that low inflation and weak wages may last longer than expected, therefore, the recovery of wages as the labour market improves may be softer. The Euro moved between a low of 1.1379 and a high of 1.1440 against the Greenback. Meanwhile, out of the US on Friday we saw a mixed bag of US Jobs data released, June payroll employment growth rose to 222k beating expectations of 179k. However, surprisingly there were more people looking for work with the unemployment rate increasing to 4.4% last month from 4.3% in May. Average hourly earnings were up a shade lifting the year-on-year wage increase to 2.5% from 2.4% in May, indicating there is still some slack remaining in the labour market.
New Zealand Dollar
NZD / USD
0.7200 – 0.7320
On this day in 1967 New Zealand converted over from using pounds and pence marking today the anniversary of the introduction of decimal currency. 50 years ago, the 1, 2, 5, 10, 20 and 50 cent coins were introduced along with $1, $2, $5, $10, $20 and $100 banknotes. The Kiwi Dollar traded within a tight range on Friday against the US Dollar ending the session around 0.7280. A fairly quiet week ahead on the local data front with the only releases scheduled monthly Food Price Index on Thursday and the Business NZ Manufacturing Index on Friday. The NZD/USD pair is currently trading at 0.7274. We now expect support to hold on moves approaching 0.7259 while any upward push will likely meet resistance around 0.7347.
0.7500 – 0.7700
The Australian Dollar is weaker when valued against its US counterpart and has moved lower for a fourth straight day in a row trading as low as 0.7567. Despite local Trade data intraday showing a surplus rebound sharply in May of 2.47bn the Aussie was dragged lower with investors thoughts still on the RBA' neutral stance. The rebound was reflected in coal exports after Cyclone Debbie has disrupted output in April. Total exports rose 8.5% in May after a 7.5% drop in April. Meanwhile, imports rose 0.7% in May after a 0.4% decline previously. The local docket remains lights today and attentions will turn to tonight' US non-farm payrolls and unemployment with short-term volatility expected.
1.7050 – 1.7150
The Euro received a major boost overnight reaching a high of 1.1424 breaking through 1.1400 level, getting an expected boost from the ECB's account of the monetary policy meeting. The hawkish commentary was certainly felt across financial markets with the Euro the best performing currency in the last 24 hours. 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. All eyes tonight will be on the upcoming US non-farm payrolls for June with expectations payrolls to increase by 178,000 with the unemployment rate to remain steady at 4.3%. The Greenback also opened weaker versus the Pound Sterling at a rate of 1.2968.
0.7200 – 0.7380
The New Zealand Dollar took a turn lower overnight as selling pressure resumed in overnight trading. United States Treasury yields rose to near eight week highs putting a dampener on higher yielding currencies such as the Kiwi. Markets saw a dip in the NZD/USD cross from 0.7285 to an overnight low of 0.7245. Broader US Dollar weakness was seen during the North American session as the New Zealand dollar clawed its way back to nearly pair losses on the domestic open. With little domestic data on the docket, further leads will be taken from U.S Non-Farm Employment data this evening. The New Zealand Dollar opens this morning at 0.7275 against the U.S. Dollar.
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.
1.6900 – 1.7100
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).
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.
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