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AUD / USD
Whilst the worlds reserve currency continued to drown yesterday the Australia dollar took flight, racing to levels not seen since May 2015. Suggesting that the Reserve Bank of Australia possess a more hawkish view of the economy than many had expected; minutes from the Central Bank' last meeting showed that it expected growth to have picked up notably during the second quarter. Presenting the largest shock, comments that neutral interest rate settings represent levels closer to a cash-rate of 3.5 percent, the Australian dollars reaction was swift, rocketing to a high of 0.7942 versus its US Counterpart. Opening 1.5 percent higher this morning at a rate of 0.7915, volatility levels are likely to remain elevated today ahead of domestic labour market numbers.
Great British Pound
GBP / AUD
USD, EUR, JPY
Large movements by the Australian Dollar dominated headlines yesterday as the US Dollar continues its drive lower. Both equity markets and commodity prices finished flat for the day as the US Dollar Index (DXY) fell 0.6%, a 10-month low. News of the United States healthcare bill being rejected in the senate did further harm for the greenback as markets question President Trumps ability to close deals. The bears came out to play as USD/JPY slid from its retest of the 113.00 handle to just hang on above 112.00 in the close of the North American session. The Euro was the biggest winner, seeing a 1% gain for the day, at one point rising from 1.1470 to an intraday high of 1.1585 before settling slightly lower this morning to open at 1.1555. After a day of large swings, we expect a calmer day with little macroeconomic data released around the globe today.
New Zealand Dollar
NZD / USD
0.7300 – 0.7400
The New Zealand dollar traded in a wide range against the US dollar overnight amongst some heavy currency swings across the globe. Earlier in the session, NZ' Q2 Inflation numbers came in under expectation pushing the Kiwi 60 pips lower to around 0.7265. Following the collapse of the US healthcare bill however, the Kiwi soared to 0.7353 to open this morning at 0.7342. Despite the softer CPI numbers in NZ, the Kiwi traded within a tight range against the other majors. Against the Sterling, the Kiwi extended slightly to open at 0.563 while conversely falling 0.2% against the Euro to open at 0.6355. Across the Tasman however, the hawkish comments from the RBA minutes has sent the Aussie flying across the board and driven the Kiwi cross rate down by about 1% to open at 0.9276. With a quiet day on the domestic front, all eyes now turn to Australian unemployment numbers and Japanese monetary statements for direction.
Supported early, the Australian dollar reached its highest level in two years when valued against its US Counterpart yesterday after economic prints from China topped forecast. Whilst base metals also enjoyed a strong session, highs of 0.7834 proved to be relatively short-lived for the AUD on Monday as investors remained mindful of the fact the domestic unit has captured gains in excess of 8 percent since the beginning of this year. In looking to add further momentum, opportunities for additional topside arrives tomorrow ahead of a monthly labour market report. Opening marginally softer at a rate of 0.7798 attention today will be focused towards minutes from the Reserve Banks last meeting.
It was a relatively slow session to start the week as a public holiday was observed in Japan. Both equities and the US dollar index saw little movement also due to a light economic calendar in the United States. Chinese data was on the pace yesterday, supporting commodity currency risk on movements. GDP, industrial production and retail sales all fared better than expectations. Focus shifts to the Eurozone this week as the ECB meet for their monthly press conference. Traders will be keen to get any further hints of bond tapering by ECB President Mario Draghi as the EUR/USD nudged up towards 1.15. USD/JPY looks to push back up to the trend line between 112.80 and 113.50 ahead of Bank of Japans policy meeting on Thursday afternoon.
0.7250 – 0.7360
The New Zealand Dollar has opened weaker against the Greenback ahead of today's inflation data which is expected to come in weaker than the 0.3 per cent Reserve Bank forecast. Economists expect inflation to come in at 0.2 per cent in the three months ended June 30. Today we will also see the release of the Global Dairy Trade auction which will be closely monitored by traders. The NZD/USD pair is currently trading at 0.7327. We now expect support to hold on moves approaching 0.7259 while any upward push will likely meet resistance around 0.7347.
0.7750 – 0.7900
Breaking through the 78 US Cents mark for the first time since May 2015, the Australian dollar benefitted in a big way late last week from a notably softer Greenback. Driven higher initially by comments made by US Fed Chair Janet Yellen who surprised investors by noting that monetary policy settings are sitting a lot closer to neutral than many had expected, a raft of disappointing economic releases from the world' largest economy on Friday further increased the appeal of the AUD. Having touched an early session high of 0.7834 when valued against its US Counterpart, the AUD remains vulnerable to additional price-fluctuations today ahead of an all-important GDP and Industrial production print due out of China this morning.
Price action was predominately moved by the eagerly awaited release of United States core CPI inflation for the month of June. Annualised CPI growth declined to 1.6% from 1.9% in May, disappointing market expectations and dampens the potential for a third interest rate hike by the Fed this year. Retail sales were also lower as the US Dollar was sold off in droves against the majority of major currencies. Euro continued its run, seeing a 14-month high last week of 1.1480 after a greenback sell off ahead of their own set of core inflation figures this evening. USD/JPY slumped from 114.30 highs to the mid 112' on Friday evening, with a bank holiday in Japan expected to slow volatility. Data set from China today will be the main focus on investors’ minds.
The Kiwi advanced further against the Greenback after weak US data reduced the prospects of a rate hike. With US inflation data surprising the market on the downside, coupled with soft retail sales and consumer sentiment numbers the USD fell dramatically across the board. With the NZD reflecting the smallest gain at 0.4% the Kiwi now trades around 0.735 this morning. Trading at a near five month high, the Kiwi now turns to second quarter inflation figures tomorrow for direction.
0.7625 – 0.7780
The Australian dollar marched higher yesterday afternoon, continuing its impressive run when valued against its US Counterpart. Breaking initially back through the 77 US Cents bracket, highs of 0.7739 were briefly witnessed as the US Dollar Spot Index slumped to its lowest level since September 2016. Supported early by some strong Trade Balance numbers from China which showed firmer global demand is assisting broader economic momentum, eyes and ears over the past 24 hours have remained fixed to Janet Yellen who continued her testimony before the House Financial Services Committee. Looking towards a weekly close above 0.7720 mark the Australian dollar currently swaps hands at a rate of 0.7729.
1.6650 – 1.6850
In the early European session the EUR/USD pair gained ground and touched a high of 1.1456 as German Final CPI data posted a gain of 0.2%, which was in line with expectations. As the US markets opened the Euro suffered a setback against the worlds reserve currency retracing the gains made earlier on in the week, the pair fell to touch an eventual low of 1.1370. The Fed continued day two of the semi-annual testimony to congress, Yellen didn’t pull out any surprises and reiterated the Fed planned to raise rates gradually and would begin trimming its balance sheet before the end of the year. Turning to economic data, out of the US overnight unemployment claims fell last week for the first time in a month pointing towards strength in the labour market and Producer Prices rose unexpectedly. Attentions now turn to key events out of the US tonight with the release of retail sales, CPI and industrial production. Expectations are for a solid rebound in June retail sales and industrial production and a gradual re-acceleration in June core CPI inflation.
0.7200 – 0.7380
The New Zealand Dollar advanced against the Greenback overnight powering through 73 US cents. The kiwi reached an overnight high of 0.7326 amid speculation the Reserve Bank may begin to raise interest rates in the near term. Any interest rate hike will depend on Inflation which is currently tracking below the RBNZ's projections, so all eyes will be on next week' Consumer Price Index data for further direction. There are no scheduled data releases today in New Zealand. The NZD/USD pair is currently trading at 0.7319. We now expect support to hold on moves approaching 0.7260 while any upward push will likely meet resistance around 0.7350.
The Australian dollar has continued its upward ascendency over the past 24 hours benefitting from a Greenback which has retreated across the board. Following testimony from US Federal Reserve Chair Janet Yellen which signalled that policy makers won’t be rushing into tightening policy further, the persistently low inflationary environment which continues to complicate the path to higher rates will be placed front and centre through to the end of this week. Ahead of PPI and CPI numbers which are expected out of the United States this evening and on Friday, the Australian dollar touched an overnight high of 0.7685 when valued against its US Counterpart, stronger this morning as it currently buys 76.77 US Cents.
The Euro Dollar has once again touched a fresh 14-month high against the Greenback during yesterday' early session amid fresh concerns over the Trump administrations alleged connection to Russia, the US Dollar faced selling pressure as investors worried it presented a fresh distraction from the administration' economic agenda. The pair started to erase gains later in the day as Janet Yellen' addressed congress in its semi-annual testimony, her comments seemed to present an optimistic tone about the U.S economy which helped the Greenback recover, currently EUR/USD changing hands at 1.1415 at time of writing. On the data front, oil futures rose on the back of Crude Oil Inventories falling by 7.6 million barrels in the last week, compared with expectations for a decrease of 2.9 million barrels. Looking ahead Yellen will continue to answer questions from Congress and we also see the release of US PPI and Unemployment Claims.
0.7200 – 0.7310
The New Zealand Dollar is marginally higher against the Greenback this morning with solid gains around 0.8% helped by the softer USD and positive risk sentiment. The Kiwi reached an overnight high of 0.7269 after Federal Reserve chair Janet Yellen said the Fed would not need to raise rates "all that much further". Pretty quiet day ahead on the local economic data front with the only scheduled release today the Business NZ Manufacturing Index for the month of June. The NZD/USD pair is currently trading at 0.7254. We now expect support to hold on moves approaching 0.7210 while any upward push will likely meet resistance around 0.7265.
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