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By BRETT OTTAWA

UK Elections take centre stage


Australian Dollar

AUD / USD

Expected Range

0.7500 – 0.7650

The Australian dollar rally this week eventually abated after strong movements above the 0.75 handle this week. Opening at middle ground of 0.7550 on Thursday, the release of Trade Balance figures was the catalyst for Aussie dollar downside progression to intraday lows of 0.7525. Trade balance figures showed a surplus of $555m for the month of April, sharply down from the previous month surplus, with a slump in coal exports the main driver. AUD/USD cross moved sideways for the majority of the session as U.K. elections took focus by major markets around the world. Despite climbing back to an overnight high of 0.7550, movements were seen back into the Greenback as exit polls in the UK start filtering through to the market. The AUD/GBP cross is the major mover of the day up 1.3% on writing to 0.5890. The Australian Dollar moved lower immediately this morning by twenty-five pips to 0.7525 against its US counterpart as we expect heightened volatility in the lead up to results in the UK general election.

Great British Pound

GBP / AUD

Expected Range

1.6800 - 1.7200

The Great British Pound traded flat for the first half of yesterday' session until the beginning of European trade where the Sterling came under some selling pressure against the US Dollar. The GBP/USD moved from levels of 1.2977 down towards 1.2908 as traders squared out of long positions ahead of the UK election. The polls have now closed and as we open this morning in Australasia the pair has gapped considerably lower buying 1.2745 at the time of writing after a shock exit poll suggesting the Tories will fail to win a majority. GBP/AUD also lower buying 1.6950 and against the New Zealand Dollar 1.7785 . Markets will be closely watching the results as they unfold live throughout the day, will Theresa May and the Conservative Party continue to lead the UK or will Jeremy Corbyn and the Labour Party pull off a surprise. In other news, a raft of economic releases are due starting with UK Manufacturing Production and Goods Trade Balance.

Majors

USD, EUR, JPY

Expected Range

N/A

Overnight in the US, the greenback moved slightly higher after former FBI Director James Comey gave his testimony to a Senate Committee raising questions about whether US President Donald Trump obstructed justice in his interactions with the former FBI director. In the Eurozone, the European Central Bank left its benchmark interest rate unchanged at 0.00%. The message from ECB president Mario Draghi was that the risks are still ’tilted to the downside’. The EUR/USD pair is currency trading at 1.1205. We now expect support to hold on moves approaching 1.1170 while any upward push will likely meet resistance around 1.1250. The US Dollar advanced for the second consecutive day against the Japanese Yen. The USD/JPY reached an overnight high of 110.38 and is currently trading at 110.06.

New Zealand Dollar

NZD / USD

Expected Range

0.7100 - 0.7250

The NZD shrugged off macro-economic events overnight to break through 0.72 and reach a high of 0.7222. Currently trading at 0.72, the Kiwi' slow grind upwards continues to outperform despite a lack of strong momentum and global risk events. The Kiwi now turns to a loaded US economic data docket for further direction. Over in Australia, the Aussie continues to hold its gains against the USD ultimately leaving the NZD/AUD rate at a steady 0.9550 this morning. All eyes now turn to the on-going UK election with a surprise result plausible. With the exit polls signalling a potential hung parliament, the NZD/GBP currently trades at 0.562.

By BRETT OTTAWA

Australian Dollar moves notably higher


Australian Dollar

AUD / USD

Expected Range

0.7500 – 0.7650

Attracting substantial interest the Australian Dollar tracked notably higher intraday yesterday. Reaching an eventual one-month peak of 0.7566 when valued against its US Counterpart, demand was spurred by a GDP reading from the ABS which showed Australia' economy had grown by 0.3 percent over the first three months of this year. Whilst a marked slow-down from the 1.1 percent recorded during the final quarter of 2016, near-term fears that the Australian economy was tracking towards recessionary territory have been side-lined, at least for the time-being. Given the softness of the Greenback which has offered additional support, the Australian dollar has been on a tear over the past 24 hours, opening 0.5 % higher a rate of 0.7549.

Great British Pound

GBP / AUD

Expected Range

1.7100 - 1.7300

The Great British Pound rose to its highest level in two-weeks as the latest polls see the Conservative party leading the race against Labour in the upcoming British election. According to a YouGov poll the gap vs Labour is still very close and claims of a hung parliament is unsettling for the Sterling at the present time. The GBP/USD also referred to as the ‘Cable’ moved from levels of 1.2887 through 1.29 to touch an eventual high of 1.2966. Today' vote marks a historical event as not only will it determine who will lead the UK through the next five years but also who will oversee the Brexit. With the approach of key risk events in the UK and the US with Former FBI Director Comey set to testify before the senate, markets will be closely watching Thursdays events unfold.

Majors

USD, EUR, JPY

Expected Range

N/A

The US dollar has lost more than 1.5% against the Japanese Yen so far this week, weighed down by a sharp drop in US Treasury yields. The JPY/USD pair is currency trading at 109.36. We now expect support to hold on moves approaching 109.40 while any upward push will likely meet resistance around 110.20. On the data front, yesterday Japanese leading index declined to a five-month low in April according to preliminary estimates down to 104.5 from previous 105.7 in March. Looking ahead today all eyes will be on the Japanese final Q1 GDP figures, with expectations for a quarterly growth of 0.6% up from an initial estimate of 0.5%. The EUR/USD pair closed marginally lower 1.1256 while the GBP/USD pair rose to an overnight high of 1.2966.

New Zealand Dollar

NZD / USD

Expected Range

0.7150 - 0.7250

Overnight, the Kiwi has moved sideways against the greenback, unable to hold on above 0.72. Trading slightly lower today at 0.7194, the Kiwi has continued to bounce off resistance at 0.72 despite a general USD softening. Traders now turn to Former Director Comey' first senate testimony for a potential catalyst in the NZD/USD. Meanwhile, the Kiwi rose to a 6 week high against the euro ahead of a pivotal ECB meeting which may mark the end of European Central Bank' accommodative monetary policy stance. Currently trading at 0.6389, the NZD earlier touched as high as 0.6422. Across the Tasman, the NZD fell after the Australian GDP release and has since been range bound between 0.9510-0.9540. With Australian and Chinese Trade Balance numbers released today, further direction could be derived for the NZD/AUD cross rate.

By BRETT OTTAWA

RBA keeps rates on hold


Australian Dollar

AUD / USD

Expected Range

0.7450 – 0.7600

There has been an overall subdued reaction to The Reserve Bank of Australia' decision to keep the cash rate at a record low of 1.5 percent for a 10 consecutive month. In an announcement unanimously predicted by economists, RBA Governor Philip Lowe in his statement highlighted that sluggish real wages growth was constraining household consumption. Whilst the performance of the Australian dollar over the past 24 hours has been robust, its main form of support has come off the back of a Greenback which has slumped to an 8-month low. Ahead of today' important GDP print which is expected to reveal a mediocre growth trajectory of just 0.3 percent, the Australian dollar opens in a stronger position as it currently buys 75.08 US Cents.

Great British Pound

GBP / AUD

Expected Range

1.7100 - 1.7300

The Great British Pound was the exception in movements overnight against the US dollar as investors position themselves ahead of the UK election. While most currencies took advantage of a weaker US dollar, the Sterling moved lower from its intraday high of 1.2950 in choppy trade as opinion polls are released over the coming days. With little macroeconomic data to focus on the cable cross moved to an overnight low of 1.2875 as the YouGov poll currently show a tightening in the Conservative parties lead to 4 points ahead of Labour. GBP/USD paired losses in the North American session to test the 1.29 handle on open. The Sterling is also lower against the Australian dollar - 1.7175 and the New Zealand Dollar - 1.7950.

Majors

USD, EUR, JPY

Expected Range

N/A

The U.S Dollar enjoyed mixed fortunes through trade on Tuesday advancing early before relinquishing gains into the daily close. The US Dollar is lower this morning after a rally in US Treasuries. On the US data front, overnight the US JOLTS Jobs opening were 6.04M against 5.79M previous. The EUR/USD pair traded within a tight 40 pips range yesterday reaching a session high of 1.1284. Eurozone Retail Sales figures for the month of April rose by 0.1% when compared to March, and by 2.5% when compared to a year earlier. Looking ahead today a pretty quiet session expected with the only scheduled release of German Factory Orders and Italian Retail Sales for the month of May. The JPY/USD pair is currency trading at 109.36 tumbling below 110. The greenback saw losses against all of the major currencies but USD/JPY took the brunt of the selling. We now expect support to hold on moves approaching 109.10 while any upward push will likely meet resistance around 109.80.

New Zealand Dollar

NZD / USD

Expected Range

0.7150 - 0.7250

With Thursday bringing the UK Election, a potentially pivotal ECB meeting and former FBI Director Comey' testimony, off-shore markets are keen to reduce their positions. Traders have worked the USD lower in an attempt to offload risk before these three key events leading to a softening USD. Domestically, the Kiwi continues a strong recovery. Driven by buoyant domestic data and US policy concerns, the NZD rose to 72.05 before settling at 0.7188 this morning. Direction now turns to Thursday' three key events while keeping an eye across the Tasman for first quarter Gross Domestic Product.

By BRETT OTTAWA

All eyes on RBA decision


Australian Dollar

AUD / USD

Expected Range

0.7400 – 0.7550

Starting the new week in a buoyant mood the Australian dollar remained well supported when valued against its US Counterpart on Monday with the worlds reserve currency very much struggling in the context of a cautious global backdrop. Trading as high as 0.7498 yesterday, falling oil and US equity prices did the majority of the damage as the Aussie tracked incrementally higher during overnight trade. In what' shaping as a week littered with key risk events, policy makers are set to keep interest rates on hold when they meet today as broader measures of economic growth remain weak. Opening stronger this morning the Australian dollar currently buys 74.82 US Cents.

Great British Pound

GBP / AUD

Expected Range

1.7100 - 1.7300

The Great British Pound has regained losses sustained under the 1.2900 handle as the market turns its attention to this week' UK snap election. Despite a disappointing UK Services PMI release for the month of May, Sterling was little moved early on in European trading. Sterling then advanced to a 10-day high of 1.2940 as opinion polls suggest a Conservative Party victory on Thursday evening. With regular opinion polls in the lead up to this week' snap elections, it is expected to be a volatile week for the Sterling as it drifted off to test the 1.2900 handle on open this morning. The Sterling opens lower against the Australian dollar 1.7230 and steady at 1.8080 against the New Zealand Dollar.

Majors

USD, EUR, JPY

Expected Range

N/A

On the back of a public holiday in some European countries yesterday the US dollar traded within limited range all through Monday. The EUR/USD pair ended the day marginally lower trading at 1.1234, slightly weaker than last week' high of 1.1284. The EUR/USD pair is currently trading at 1.1258 and attentions now turn to next week' ECB monetary policy meeting. The British Pound broke through the 1.2900 level overnight reaching a high of 1.2940 before settling around 1.2906. There are no major data releases scheduled before the upcoming UK elections. In Japan, there were no data releases yesterday. Another quiet day ahead with again no data releases scheduled. The JPY/USD pair is currency trading at 110.46. We now expect support to hold on moves approaching 110.20 while any upward push will likely meet resistance around 110.85.

New Zealand Dollar

NZD / USD

Expected Range

0.7100 - 0.7200

We’ve seen a fairly benign overnight session following the public holiday with most of the price action centred on softer employment data on Friday. Following the disappointing employment numbers in the US, The NZD broke through resistance at 0.71 to reach a 3 month high at 0.7149. Currently trading at 0.7134, the Kiwi looks to this weeks’ Global Dairy Trade Auction for domestic direction and this afternoons RBA statement for the Aussie cross rate.

By MATT RICHARDSON

Soft labour market data forces USD to fresh lows under Trump Presidency


Australian Dollar

AUD / USD

Expected Range

0.7380 – 0.7480

The Australian dollar moved higher into the weekly close on Friday as investors took advantage of a softer than anticipate U.S jobs report and pushed the commodity driven unit back through 0.74 U.S. cents. Having touched intraday lows at 0.7374 the AUD rebounded bouncing to session highs at 0.7443 as grim U.S macroeconomic data forced investors to revisit their expectations for multiple rate hikes in half two of 2017. The Aussie has remained largely range bound through the last fortnight bouncing between support at 0.7380 and resistance on approach to 0.7480/0.75. Attentions this week turn to the RBA and tomorrow monetary policy statement. We anticipate the board to maintain its current neutral policy stance with rates to hold at 1.5%.

Great British Pound

GBP / AUD

Expected Range

1.7150 - 1.7450

The Great British Pound offered little to excite investors through trade on Friday bouncing within a relatively tight 50 point range for much of the day. With little macroeconomic data on hand and a break in opinion polls investors seemed wary of extending positions ahead of the June 8 General Election. While the Conservatives are still pegged to retain government variances in polling suggest a swing in the majority which could have a wider impact on Brexit negotiations and medium term direction. Opening sharply lower following the horrific events at the weekend with London again besieged by terror attacks attentions turn Thursday' election for direction and guidance. We are watching resistance at 1.2960/1.30 and support at 1.2780 in the lead up.

Majors

USD, EUR, JPY

Expected Range

N/A

The U.S Dollar touched a new low under the Trump Presidency after a softer than anticipated non-farm payroll print forced investors to recalibrate monetary policy expectations. The monthly Job' report showed fewer than expected new jobs added to the economy in May while average hourly earnings and wage growth were largely unchanged and data for March and April were revised lower. The slowdown suggests perhaps a shift in labour market momentum and while we still anticipate the Fed will raise rates later this month expectations for additional rate hikes later in the year are waning. The dollar slipped below 110.50 against the Japanese yen while the Euro edged nearer 1.13 touching intraday highs at 1.1280. Attentions now turn to revised labour costs and services data for direction through trade on Monday ahead of ECB rate announcement and commentary. A hawkish Draghi and ECB could prompt additional Euro gains as the market is currently leant toward a controlled and perhaps dovish statement continued accommodative monetary policy.

New Zealand Dollar

NZD / USD

Expected Range

0.7080 - 0.7180

The New Zealand dollar' upward momentum continued through trade on Friday following weaker than expected U.S labour market data. The NZD surged through resistance at 0.71 to touch intraday day and two month highs at 0.7142 after May' non-farm payroll report showed a step decline in the number of new jobs added to the US economy. Further adding to the Greenbacks woes was a downward revision to March and April numbers suggesting labour market momentum is waning and that the recent slowdown may be more than just a seasonal correction. With resistance countering moves toward and through 0.7150 investors will be keenly attuned to macroeconomic data sets over the coming weeks as markers for a potential shift in Fed policy and the catalysts for additional Kiwi upside.

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