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AUD / USD
The Australian Dollar steadied through trade on Friday edging higher into the weekly close and consolidating above 0.7550. With minimal macroeconomic data on hand to drive direction the AUD found support in stronger commodity prices, lead by a resurgence in gold, while the USD suffered heavy selling as investors questioned the likelihood of additional Federal Reserve monetary policy action. Despite commentary from FOMC and Fed officials supporting continued tightening of monetary policy conditions, a string of softer macroeconomic data sets, a perceived imbalance in economic growth and the pall of weak inflation weighed heavily on the world' base currency and investors looked to dump the greenback. The Aussie bounced off intraday lows at 0.7536 to touch session highs at 0.7577 and opens this morning buying 0.7566 U. S cents. With its fortunes heavily tied to US monetary policy expectations attentions now turn to U.S Durable Goods Orders for direction through Monday.
Great British Pound
GBP / AUD
USD, EUR, JPY
Markets were relatively flat on Friday as the U.S. Dollar saw small losses against G10 currencies. Both Flash Manufacturing and services PMI numbers slowed for the month of June, although still showing a stage of expansion. The U.S. Dollar index closed 0.25% down for the day after one month highs set earlier in the week. Both equity and treasury markets were unchanged. The Euro was sent higher this week after a number of strong manufacturing PMI readings in France and Germany. Hitting a weekly low of 1.1120 on Tuesday, The EUR/USD cross ended the week higher just below the 1.12 handle with further direction dictated by ECB president Mario Draghi' speech this evening. USD/JPY was little changed, moving slightly lower to 111.20 and could look to retest weekly lows at 111.00 dependent on Treasury yield movements. And finally FOMC Member James Bullard reiterated that the Fed are watching inflation data closely, dictating any future interest rate rises.
New Zealand Dollar
NZD / USD
0.7200 – 0.7300
The New Zealand dollar finished higher against the Greenback in New York trading on Friday. The Kiwi reached a high of 0.7281, up from 0.7267 cents in Asia last week. Quiet day ahead locally with no economic data releases scheduled. Looking at the week ahead tomorrow will see the release of Trade Balance for the month of May. On Thursday, monthly ANZ Business Confidence and finally business confidence on Friday, which will provide an update on how the domestic economy may be faring. The NZD/USD pair is currently trading at 0.7280. We now expect any upward push will likely meet resistance around 0.7320. The kiwi dollar rose to 0.9624 (1.0391) Australian cents from 96.10 (1.0405) cents in New York on Friday.
0.7480 – 0.7630
The Australian dollar opened the Australian trading session down against the Greenback for the fourth consecutive day after gaining initially during the American session. Following a sharp correction downwards, the pair oscillated between 0.7561 and 0.7537 to ultimately tread water around the 0.7540 mark. The continual, incremental decline of the Aussie this week has primarily been driven by a softening equities market and broader macro-economic clues in the international market. Closing out the week, the Aussie looks to off shore clues for further direction. The lack of domestic data continues next week with direction being derived from overseas announcements including US GDP and Unemployment Claims.
1.6750 – 1.6950
The Great British Pound is slightly weaker this morning when valued against the US Dollar. The Pound Sterling hit an overnight low of 1.2654. Prime Minister Theresa May was in Brussels as she holds talks on Brexit with EU leaders for the first time since losing her majority at the general election. British Prime Minister Theresa May is trying to form a majority government. On the local data front, there are no macroeconomic data releases scheduled for today. The GBP/USD pair is currently trading at 1.2678. We now expect support to hold on moves approaching 1.2630 while any upward push will likely meet resistance around 1.2690.
The U.S Dollar held near one month highs through trade on Thursday as the markets and investors appeared to merely mark time and take stock of recent gains in what was a session free of headline domestic data. An uptick in house prices and steady labour market data were offset by a lower bond and treasury yields as demand for the worlds base currency falters and investors amend long positions. Maintaining a 50-point range against the Yen the dollar opens this morning buying 111.30 JPY while the Euro moved marginally lower, slipping through 1.1150 to touch intraday lows at 1.1139. Attentions now turn to a raft of European Manufacturing and services data for direction into the weekend. With support for the 19 nation combined unit growing on improved macroeconomic indicators and whisperings of amendments to quantitative easing on the rise then a strong print could force the Euro back toward resistance at 1.1190/1.12.
0.7180 – 0.7280
The New Zealand Dollar saw minimal movements yesterday as it remains in this week' trading range between 0.72 and 0.73 cents against the US Dollar. Early movements higher on Thursday were supported by RBNZ' decision to keep interest rates on hold as expected at the benchmark rate of 1.75%. RBNZ Governor Glenn Wheeler expects an uptick in economic growth domestically, advancing the Kiwi higher to 0.7265 before trading sideways till close. Markets are now pricing a 60% chance of the next rate move to be higher by Mid 2018 as inflation remained moderate with expectations to increase gradually. With little economic news releases offshore, volatility was low overnight as the NZD/USD cross hit an overnight high of 0.7272 and opens at 0.7260 this morning.
The Australian Dollar has retreated against the U.S Dollar and is currently changing hands at 0.7553 at the time of writing. Having moved off a high of 0.7582 in early Asian trade, the local unit inched lower throughout the global session to touch an eventual low of 0.7541. Yesterday saw the release of low tier macroeconomic data which did very little to the AUD/USD pair. The Westpac-Melbourne Institute Leading Index reported the growth rate slowed from 1.01% in April to 0.62% in May, despite still being above trend two major components have driven the slowdown – commodity prices and the yield spread. As we eased into the U.S session, the Australian Dollar remained on the back foot as Existing U.S homes sales unexpectedly rose in May when a decline of 0.5% was expected.
The Great British Pound advanced against the US Dollar overnight. It was a wild session for the Pound Sterling against the greenback, initially falling to a 2-month low of 1.2589, before reaching a high of 1.2709. The rally in the Sterling was led by hawkish comments coming from Bank of England' Chief Economist Andy Haldane who said he is ready to vote for a rate hike amid rising inflation. Andy Haldane's comments came as "a major surprise" as the Bank of England Chief Economist has long been a known dove. The GBP/USD pair is currently trading at 1.2670. We now expect support to hold on moves approaching 1.2630 while any upward push will likely meet resistance around 1.2690.
The U.S Dollar appeared to consolidate through trade on Wednesday shifting sideways and banking gains earner through Monday and Tuesday. Renewed appetite for risk and a heightened expectation the Fed will indeed follow through and raise interest rates again this year has prompted a shift away from the heavily bearish sentiment that plagued the worlds base currency through March, April and May. Commentary from Fed officials has bolstered markets and when combined with promises of tax reform from top White House Republicans a resurgence in the dollar may be forming. The Greenback touched intraday highs at 111.70 against the Yen while the dollar index hovered near one month highs and the Euro struggled to break back above 1.12. Attentions now turn to unemployment claims and labour market data for direction through trade on Thursday.
0.7180 – 0.7320
The New Zealand Dollar offered little through trading yesterday polling between 0.7204 and 0.7250 ahead of the RBNZ Official Cash Rate announcement. As widely expected, the RBNZ chose to hold the rate today at 1.75, however they also released a slightly more hawkish statement leading to a small rally upwards to 0.724. Against the Kiwi' other major counterparts, the NZD/AUD rose slightly to 0.9587 and the NZD/GBP rallied to 0.5713. With little else on the economic calendar for the week, the NZD looks to offshore risks and events for direction.
The Australian Dollar Enjoyed mixed fortunes throughout the global session yesterday enjoying gains domestically before suffering a downward correction throughout early European trade. The AUD/USD pair touched a high of 0.7624 and a low of 0.7566 and once again the 0.7630 handle is proving to be a somewhat strong resistance level. Domestically we saw the release of the RBA' Monetary Policy Meeting Minutes from its June meeting where the central bank signalled some optimism about the state of the economy. While wage and inflation pressures remain a point of concern so too does the housing market, markets will now shift their focus on the RBA and when they will start lifting rates.
The Great British Pound suffered key losses through trade on Tuesday touching two month lows, breaching the 100 day moving average and opening up possible moves toward and through 1.2550 and 1.25. Investors reversed gains enjoyed in the wake of last week' Bank of England monetary policy meeting after Governor Carney reiterated the MPC' commitment to accommodative policy, saying “this was not the time to raise rates”. Sterling moved through 1.2650 as additional downward pressures followed suggestions Standard and Poors would downgrade the U. K' Credit Rating pending the outcome or Brexit negotiations. As both political and economic uncertainty loom over the British Isle the hard fought gain enjoyed through April and May could well face a correction and a move back below the 1.25 handle.
The U.S dollar enjoyed a second consecutive daily advance through trade on Tuesday touching three week highs against both the Yen and the Euro while pushing higher against commodity driven units as crude oil prices entered new bearish channels. Buoyed by a continued stream of hawkish FOMC and Fed commentary the greenback edged toward 112 JPY before stalling amid key technical resistance and the 100 day moving average at 111.85 while the Euro broke supports at 1.1130/40 touching intraday lows at 1.1119. Investors now seem to be catching up with the Fed' hawkish outlook and we are seeing a possible shift in momentum falling a period of heavy selling. If macroeconomic indicators being to offer broader improvements and wage growth forces an uptick in inflationary pressures, then we can expect wider USD gains as we analyst look to monetary policy normalisation for direction. Attentions today turn to crude oil inventories as the primary item on the domestic docket while broader risk sentiment will govern flows into next weeks all important GDP print.
0.7150 – 0.7320
The New Zealand Dollar opened yesterday at support levels of 0.7220 and advanced higher in the local session to an intraday high of 0.7265. The latest GlobalDairyTrade Price Index overnight declined for the first time in four months by 0.8% after a previous gain of 0.6%. The Kiwi slipped to 0.7230 against the US dollar after the release, the main reading of whole milk powder prices dropped 3.3%. Despite the limited movements, markets expects a boost in volatility in the lead up to tomorrow mornings RBNZ monetary policy meeting. While it is expected that interest rates remain on hold at 1.75%, the market is currently pricing at a 50% chance of a hike by May 2018. The NZD/USD opens at 0.7240.
The Australian Dollar opens fractionally lower bouncing around levels of 76c against the U.S dollar as New York Fed president Dudley reinforced expectations of further increases in interest rates. He noted that inflation was a little lower than what they would like but if the labour market continues to tighten, wages will gradually pick up and with that inflation will gradually get back to their targeted 2 percent. Locally, in Canberra yesterday, the RBA governor Phillip Lowe said that over the next couple of years Australian economic growth will “be a bit stronger than it has been recently” also noting that “as things currently stand, it looks likely that average growth in per capita incomes over the next quarter of a century will be lower than over the past quarter of a century. We should, though, be capable of stronger growth than we have seen over the past few years”, the Governor was optimistic on the global economy with 2017 seeing some improvement overall still adding there are still some risks. The AUD/USD pair currently buying 0.7599 against the Greenback with 0.7630 still seen as strong resistance.
1.6675 – 1.6875
The Great British Pound started the session strong against the US Dollar reaching a high of 1.2814 before fading after the official start of Brexit negotiations in Brussels. It has now been a full year since the Brexit referendum. The UK's David Davis and the EU' chief Brexit negotiator Michel Barnier slammed the door on any prospect of a “soft” Brexit. Michel Barnier also said he was "not in the frame of mind to make concessions or ask for concessions". As a result, the GBP/USD pair fell to an overnight low of 1.2723. The Pound is currently trading at 1.2769. We now expect support to hold on moves approaching 1.2710 while any upward push will likely meet resistance around 1.2760.
The U.S Dollar edged marginally higher through trade on Monday buoyed by ongoing and upbeat commentary from the FOMC and key Fed officials. New York Fed President William Dudley reiterated the Fed' commitment to tighter monetary policy suggesting the open market committee still believes the labour market will fuel an uptick in inflation and allow the Fed to raise rates again before the end of the year. The hawkish tone renewed demand for the worlds base currency and drove a rally through 111.50 JPY. The USD touched a two week high against the Yen as analyst compare Central Bank Monetary policy outlooks and comments from BoJ President Kuroda who last week made clear the BoJ' commitment to its current stimulus plan. As the focus turns again to central bank policy expectations attentions today will be governed by commentary from FOMC members Fischer and Kaplan for wider direction.
The New Zealand Dollar opened the week at 0.7250 and failed in its attempt to break through 0.73 once again. Rallying early in Monday mornings Asian session after strong Westpac consumer confidence, the Kiwi gained some 50 pips against the U.S. Dollar. Profit taking resumed as the NZD/USD cross paired all gains heading into offshore sessions as an upbeat FOMC member William Dudley drove the U.S. dollar higher in overnight trading. NZD/JPY hit three month highs yesterday of 81.00 as the New Zealand dollar takes further direction from the GlobalDairyTrade Auction this evening, opening lower this morning at 0.7220.
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