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AUD / USD
0.7900 – 0.8000
One of the strongest global performers yesterday the Australian dollar broke down key resistance levels when valued against its US Counterpart on Thursday, comfortably breaching the 80 US Cents mark. Despite a week which has been jam packed with key risk events, the AUD has seemingly been on auto-pilot with favourable risk proximities as well as a muted Greenback both providing a solid platform for its push forward. Suggesting there wasn’t a great deal of conviction underlying the climb higher, highs of 0.8065 proved to be relatively short-lived and despite a trading range in excess of 1 US Cents the Australian dollar once again opens in a familiar position of strength, albeit slightly lower than the same time yesterday at a rate of 0.7967.
Great British Pound
GBP / AUD
1.6300 – 1.6450
USD, EUR, JPY
The greenback advanced higher overnight against its major counterparts, having reverted most of its post-Federal Reserve losses. The EUR /USD pair reached a high of 1.1776 earlier in the day. Now trading at 1.1676. Against the Pound Sterling the Greenback reached a 24-hour high of 1.3158 before settling around 1.3062. On the US data front last night Durable Goods Orders surged by 6.5% in June, beating expectations of a 3.5% advance. We also saw the release of Goods Trade Balance for the month of June, the trade deficit was of $63.9B, better than previous months $65B. Weekly US jobless claims climbed by 10,000 for the week which came in at 244K, up from previous' week 234K. Looking ahead today the main data release will be US Q2 preliminary GDP with expectations the US economy grew by 1.3% in the three months to June.
New Zealand Dollar
NZD / USD
0.7400 – 0.7550
The New Zealand Dollar retreated in overnight trading after reaching a 26-month high against the US Dollar. Opening this morning at 0.7490, the Kiwi advanced yesterday to as high as 0.7557, spurred on by what traders considered to be a dovish statement from the United States Federal Reserve. As the American session opened overnight however, the Greenback hit back against its detractors clawing its way back on the strength of US durable goods orders and further consideration of the Fed' statement. Across the Tasman, the Kiwi traded within a tight range and opens this morning at 0.94, reflecting the midpoint of the weekly range. Looking ahead to a light domestic economic calendar, direction is expected to be derived from off shore data. In particular, traders will look to US GDP numbers later in the evening.
0.7900 – 0.8050
The Australian Dollar soared in overnight trading in the wake of a dovish Federal Reserve statement. Reaching a high of 0.8013, the Aussie opens this morning slightly lower at 0.8001. Starting yesterday in relatively neutral territory the Australian Dollar quickly saw some movement when the Australian CPI results came in under expectation. Falling rapidly to 0.7878, the Aussie regained much of its losses during the Asian session as commodities again fuelled demand for the Aussie. Led by Iron Ore, the AUD rebounded to above the 0.79 level before the Federal Reserves’ comments sparked a broad sell-off of the USD and sent the Aussie even higher to finally pierce the 0.8 mark. Traders now turn back to off-shore announcements for further direction for the pair.
Overnight the US Federal Reserve decided to keep official interest rates on hold at 1.25 per cent, which was expected, as Janet Yellen failed to surprise the market indicated the Fed will begin reducing its balance sheet "relatively soon,". On the back of the Federal Reserve' monetary policy statement release the Greenback fell against a half-dozen of its major rivals. Most notably, the EUR/USD reached a 52 week high of 1.1747 while the Australian dollar also advanced to a two year high of 0.8013. Looking ahead today at the US macro-economic calendar and we will see the release of Unemployment Claims, Durable Goods and Goods Trade Balance which will continue to generate any short-term volatility in the market.
0.7450 – 0.7600
The New Zealand Dollar has rallied overnight to a two-year high against the Greenback, the pair moved swiftly after the FOMC' policy statement had more of a dovish tone which financial markets quickly reacted to moving from 0.7430 a high of 0.7489. On the data front, locally yesterday NZ Trade balance posted a fourth consecutive monthly surplus in June thanks mainly to a rise in dairy prices according to a report from the Statistics of New Zealand. Milk powder, butter and cheese groups continue to be a key export commodity, the surplus rose to 242m vs an expected increase of 150m. The NZD/USD currently changing hands at 0.7524 expect to see some volatility in the NZD/USD cross as markets digest the FOMC statement and US top tier data scheduled today.
0.7850 – 0.8000
The Australian Dollar managed to hold its’ gain above the 0.79 mark opening this morning at 0.7936. Backed by continued commodity strength, particular in the Copper industry, the AUD oscillated between a low of 0.7902 and a high of 0.7970 over the last 24 hours. With the broader narrative of an immobile trump administration proving to be a concern, the USD continues to show signs of weakness, buttressing the Australian Dollars’ gains last week. Traders now turn to a packed economic calendar with Governor Lowe and CPI numbers being released today ahead of the Federal Reserves’ Cash Rate announcement.
1.6350 – 1.6500
The Greenback fall overnight against a half-dozen of its major rivals on the back of the US political environment. The US dollar is under prolonged pressure due to the continuing controversy surrounding US President elect Donald Trump. US equities have performing strong of late, rising nearly 10% year to date, and notching another all-time high on Tuesday. However the same cannot be said for the Greenback which has fallen nearly 8% year to date against it major counterparts. All attentions turn today to the FOMC statement. The US Federal Reserve is expected to keep its monetary policy unchanged at 1.25 per cent. Opening marginally lower this morning the US dollar is softer versus the Pound Sterling (1.3026) and the Euro (1.1647).
0.7350 – 0.7500
Yesterday lacked any data of economic significance and kept the NZD/USD within a range of 0.7377 and 0.7451. The RBNZ Assist Governor McDermott spoke earlier this morning on economic trends and its inflation target. He mentioned their inflation target between 1 and 3 percent on average and that a lower exchange rate would help. In regards to the neutral cash rate, a level of 3.5 percent implies 1.75 percent is stimulatory. Today sees the release of local Trade Balance figures which are forecasted to fall 100 million in June from 103 million in May. As long as the NZD/USD pair holds above 0.7375, we could see another push higher towards 0.7530 with strong resistance can expected at the 2016 high of 0.7485.
Holding near a two-year high, additional gains proved hard to come by for the Australian dollar on Monday with the domestic unit instead being supported by a Greenback which has continued to show very few signs of life. In a theme which is likely to continue ahead of Wednesday night' Federal Reserve meeting, market participants have been wary of pushing the AUD towards the 80 US Cents mark in the aftermath of the RBA' attempts to cool speculation that interest rates are heading higher. Having reached an overnight peak of 0.7967 when valued against its US Counterpart the Australian dollar opens marginally stronger this morning at a rate of 0.7922.
The Greenback advanced over its major counterparts yesterday finding support on the back of better than expected PMI numbers. US manufacturing and services sectors expanded at their fastest pace in four months, the index was up 54.2 from the previous month of 53.9, resulting in a six-month high. On a sour note existing home sales data slipped for the month of June, retreating by 1.8% to 5.52 million amid low supply. Looking ahead today all eyes will be on Japanese Monetary Policy Meeting Minutes at 9.50am AEST. The JPY/USD pair is currently trading at 111.15. We now expect support to hold on moves approaching 110.80 while any upward push will likely meet resistance around 111.50.
The New Zealand Dollar struggled to mount any significant directional momentum through trade on Monday bouncing off highs of 0.7456 and lows of 0.7418 against the Greenback. The Kiwi has ended its four-day rally having broken above two majors levels last week, we see the next major area of resistance up around 0.7485 last seen on September 2016. With little of note on the docket today attention squarely remains focused on the US Federal Reserve monetary policy meeting which is scheduled to take place tomorrow.
0.7800 – 0.8000
The Australian dollar was hit hard late last week when valued against its US counterpart after the deputy governor of the Reserve Bank, Guy Debellle hosed down speculation that policy makers were signalling to push interest rates higher. Directing comments specifically at meeting minutes which were released a few days prior, Mr Debelle stressed that there was no new policy conclusions to be drawn and that monetary positions remain neutralised and overall balanced in the near-term. Despite falling to a session low of 0.7874 the Australian dollar still manages to open the new week above the 79 US cents mark, currently swapping hands at a rate of 0.7905. Mid-week, domestic CPI figures remain the highlight over the coming days as does the FOMC meeting which starts Wednesday evening.
The Greenback finished the week down almost 1 per cent against its major counterparts amid the resignation of White House Press Secretary Sean Spicer on Friday. The Euro gained 1.6 per cent on Thursday night following the ECB monetary policy meeting. President Draghi said that the ECB remains far from achieving its mandate to get inflation around its target of 2%. The EUR/USD pair settled at its highest level since August 2015 at 1.1674, up for a second consecutive week. This week all eyes will be on Wednesday' US Federal Reserve monetary policy meeting. The market is still expecting at least one more rate hike pending for this year. The EUR/USD pair is currently trading at 1.1673. We now expect support to hold on moves approaching 1.1620 while any upward push will likely meet resistance around 1.1715.
0.7400 – 0.7540
The New Zealand Dollar has once again found upside when valued against its U.S counterpart on Friday, the pair saw fresh 10-month highs late in the New York session and traded as high as 0.7459. Friday' local data releases did little to the Kiwi with total credit card spending in New Zealand increasing for the fourth straight month in June up 0.2% and Visitor Arrivals also reached another record month. The official figures showed a net migration of a record 72,300 in the year to June, 131,400 people arrived and 59,100 left. The economic data is very light this week with only Trade Balance due out on Wednesday. The NZD/USD pair could re-test 0.7485 a Sept 16th peak in the next few days.
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