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AUD / USD
The Australian dollar has surprisingly pushed forward in overnight trade after market participants were left shocked by fresh reports of possible Russian involvement in last year' US Election Campaign. Advancing to a high of 0.7642 when valued against tis US Counterpart, its highest mark of the week, markets appeared destined for an otherwise listless session ahead of the jolt which triggered some noted selling across US dollar dominated assets. Whilst the waiting game continues ahead of Janet Yellens testimony overnight on Thursday the AUD opens 0.3 percent higher this morning as it currently buys 76.37 US Cents.
Great British Pound
GBP / AUD
USD, EUR, JPY
The Euro has rallied sharply higher against the U.S Dollar moving from low of 1.1382 and a high of 1.1480 after comments from a Fed member Lael Brainard about “moving cautiously on further increases” due to low inflation. The EUR/USD pair is currently trading at a 14-month high at 1.1469. Meanwhile, on the other side of the world, the bank of Japan said M2 money stock in Japan was up 3.9% on year in June which was in line with market expectations and Japanese Preliminary Machine Tool Orders increased to 31.1% up from 24.4% a month earlier. The data releases did little to move the USD/JPY which did touch an overnight high of 1.1407 ahead of the Fed Janet Yellen' testimony to congress on Wednesday 12th and Thursday July 13th. The testimony from Yellen always needs to be watched very closely, given potential hints on monetary policy and markets will still be monitoring comments on interest rates and policy normalisation very closely.
New Zealand Dollar
NZD / USD
0.7170 – 0.7300
The New Zealand Dollar rose against the greenback after Donald Trump Jr.'s released emails detailing 'Russia and its government's support for Mr. Trump' his father's campaign to become US president. The NZD/USD pair hit an overnight high of 0.7257. The NZD/USD pair is currently trading at 0.7221. We now expect support to hold on moves approaching 0.7208 while any upward push will likely meet resistance around 0.7265. However the Kiwi is weaker against the Euro (0.6301) and the pound sterling (0.5620). After strong NAB Business Confidence in Australia yesterday the Kiwi also fell against the Aussie trading at 1.0557 (0.9454).
Matching consensus forecast, annualised inflation data from China was in line with expectations when released on Monday. Supporting the Australian dollar which oscillated close the 76 US Cents mark for the majority of yesterday' session, the currency remains closely tied to the economic strength of Australia' most important trading partner. Offering very limited topside during the early parts of this week, an NAB Business Confidence survey today is likely to have only a muted impact on the AUD. Opening virtually unchanged at a rate of 0.7605 when valued against its US Counterpart volatility levels aren’t expected to flare-up until later in the week ahead of additional testimony from the US Federal Reserve.
The Euro Struggled to mount any significant directional momentum through trade on Monday moving between a low of 1.1390 and a high of 1.1418 against the U.S Dollar. It was a quiet start to the trading with and with the absence of any major top tier data the currency markets have opened this morning at similar levels as yesterday. Germany had their release of trade figures which reported a surplus increase to €20.3 billion, these numbers came in on expectations as well as the Eurozone Sentix Investor Confidence survey edging up slightly to 28.4, both releases did little to the Euro Dollar. The pair is seeing immediate support at 1.1382 followed by 1.1311, on the flip side resistance around 1.1448. Another quiet day is expected, Japan sees M2 Money Stock released and Preliminary Machine Tool Orders which measures the change in the total value of new orders placed with machine tool manufacturers, both pieces are unlikely to be market moving, noting that USD/JPY has seen a 5% increase since mid-June, currency trading around the 114.00 handle.
0.7200 – 0.7320
The New Zealand dollar is little changed against the Greenback this morning having opened at 0.7276. Over the past week the Kiwi and the Greenback have traded within a 50 pip range. It' a very quiet week in New Zealand with no macroeconomic data scheduled for release until Thursday. In the mean time in the absence of any notable economic data releases investors are very happy to remain on the sidelines. The NZD/USD pair is currently trading at 0.7267. We now expect support to hold on moves approaching 0.7250 while any upward push will likely meet resistance around 0.7340. The Kiwi is weaker this morning against both the Aussie dollar trading at 1.0463 (0.9557) and Pound Sterling 0.5643.
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.
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.
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.
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