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BY SHAMEEM MUSA

Greenback underpinned awaiting the Federal Reserve


Australian Dollar

AUD / USD

Expected Range

0.7490 – 0.7590

The Australian dollar opens this morning little changed when valued against its US Counterpart at 0.7536. A fairly quiet session yesterday on the macroeconomic data front saw the Aussie trade within a 40-pip range (0.7564 – 0.7524) against the greenback. National Australia Bank's monthly business survey, the only scheduled release yesterday, showed a fall in confidence from +13 to +7 index points in the month of May. Despite the drop-in business confidence, the business sector is looking quite upbeat. Looking ahead today and at 10.30am AEST will see the release of Westpac' monthly consumer confidence index. The AUD/USD pair is currently trading at 0.7533. We now expect support to hold on moves approaching 0.7500 while any upward push will likely meet resistance around 0.7565.

Great British Pound

GBP / AUD

Expected Range

1.6700 – 1.7000

Short term relief has been found for the Great British Pound overnight as it attempts to recover from its recent trough caused by Theresa May's snap election. Starting the day 1.2660, Cable recovered from two month lows to 1.2750 overnight as UK inflation figures for the month of May rose to 2.9%. The lower Sterling of late continues to impact the price of imports as core components such as consumer goods and packaged holidays were the main causes for the increase. Despite hitting near four-year inflation highs, the Bank of England has previously stated it is not concerned with current levels of inflation above its targeted band of 2% inflation, as economists predict it could be close to peaking mid-year. In Theresa Mays meeting with Macron overnight it was made clear that Brexit negotiations remain on track despite current political instability. Sterling opens steady this morning against the US Dollar at 1.2750. The Great British Pound is also higher against the Australian dollar 1.6925 and Kiwi 1.7660.

Majors

USD, EUR, JPY

Expected Range

N/A

The Euro was almost unchanged against the U.S Dollar currently changing hands at 1.1210 at the time of writing. The pair did initially edge lower in the Asian session but recovered in European trade moving between levels of 1.1185 and 1.1225 as investors eagerly await the interest rate decision by the US Federal Reserve which is due to be released at 4am Australian Eastern Standard time. On the data front German ZEW Economic Sentiment dropped unexpectedly in June to 18.6 points from 20.6 in May which is below the indicator' long-term average of 23.9. In the US, PPI figures releases were unchanged in May, meeting consensus expectations. The flat result reflected a fall in gasoline prices, while services prices increased. The Core price which excludes food and energy increased 0.3% being higher that expectations, PPI is considered to be a leading indicator of inflation for the Federal Reserve.

New Zealand Dollar

NZD / USD

Expected Range

0.7160 – 0.7260

The New Zealand dollar touched three and a half month highs through trade on Tuesday, breaking back through 0.72 U.S and touching intraday highs at 0.7228. Buoyed by wider USD weakness investors continued to push the current NZD upturn ahead of today' Federal Reserve and FOMC monetary policy statement. Analyst anticipate the Fed will raise the benchmark cash rate, meaning investors focus will be largely drawn to the commentary that accompanies the rate announcement and signals relating to policy normalisation. Any hint the Fed plans to trim its balance sheet before the end of the year will force a reshuffle in expectations. With resistance forming on moves toward 0.7245/50 and 0.7290/7300 investors will need a distinctly dovish statement to drive further NZD upside, while a hawkish and aggressive appraisal of future monetary policy could spark a USD recovery and force the NZD back toward supports at 0.7130/0.7100.

BY SHAMEEM MUSA

Markets hold steady ahead of FOMC interest rate decision


Australian Dollar

AUD / USD

Expected Range

0.7490 – 0.7590

The Australian dollar advanced against the US Dollar on Monday trading a 24-hour high of 0.7546. Yesterday was a public holiday in Australia (except QLD and WA) celebrating the Queen' Birthday. Therefore there were no scheduled macroeconomic data releases yesterday. Looking ahead today at 11.30am AEST will see the release of NAB Business Confidence for the month of May. The AUD/USD pair is currently trading at 0.7539. We now expect support to hold on moves approaching 0.7500 while any upward push will likely meet resistance around 0.7565.

Great British Pound

GBP / AUD

Expected Range

1.6650 – 1.6850

The Great British Pound remains under pressure as the fallout from the UK Election continues. As Prime Minister Theresa May continues to try and form a majority government, selling of the Sterling resumed overnight from intraday highs of 1.2770 on close of the Asian trading session. With no agreement as of yet with the conservative Irish party – DUP, we saw cable fall 1% to as low as 1.2640 in overnight trading and 2.5% since the start of the election. As Theresa May' position weighs in balance, the market turns its attention to this month' UK inflation reading which is expected to remain steady at the annualised rate of 2.7% for the month of May. The British Pound opens this morning at 1.2670 against the Greenback. It is also lower against the Australian dollar – 1.6800 and New Zealand dollar of 1.7580.

Majors

USD, EUR, JPY

Expected Range

N/A

It was mostly a quiet session overnight given the lack of any top tier macroeconomic data. The EUR/USD pair moved above 1.12 early in the session and touched a high of 1.1232 after the French President Macron looks to take an overwhelming majority in parliament after first round elections held on Sunday. The Greenback is holding steady ahead of Wednesday' interest rate decision, it is widely expected the Fed will raise rates by 25 basis points and investors will be closely watching for indications on the pace of further tightening in their statement release. Meanwhile in Japan, Core Machine Orders fell more than expected, the drop came in at 3.1% in April vs an estimate for a 0.5% gain. USD/JPY reacted very little to the data.

New Zealand Dollar

NZD / USD

Expected Range

0.7140 – 0.7240

With world-wide macro-economic events contributing to a general indecisive market, The NZD trades this morning within a narrow, 15 pip range around the 0.72 level. We did see a large 20 pip drop at the end of the Asian session but the Kiwi regained its losses on open of the European session. The Kiwi appears to be treading water ahead of a number of key data releases in the US, with the FOMC and NZ GDP both expected on Thursday morning. Over in the UK, the NZD/GBP has risen considerably since the UK election but has reversed some of these gains and currently trades at 0.5685. Across the Tasman, the Australian holiday yesterday led to a quiet local market with the NZD/AUD currently trading at 0.9550.

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.

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