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AUD / USD
0.7510 – 0.7640
The Australian dollar suffered heavy selling through trade on Thursday as a rapacious USD advanced across the board. Plunging through key technical resistance at 0.7650 the Aussie ran through 0.76 US cents to touch overnight lows at 0.7558. Buoyed by an uptick in expectations of near term monetary policy activity the USD enjoyed strong gains forcing the AUD lower under threat of a narrowing yield gap. With investors largely anticipating a period of stable or neutral RBA interest rate policy talk of a possible March Federal Reserve rate hike saw investors shift holdings into the world' base currency. Recent U.S data sets have been largely positive and commentary from the Fed has brought a rate hike sharply back into focus with CME' Fedwatch tool now pricing in a 78% chance of an upward amendment on March 16, up from just 35% probability on Wednesday. Attentions now turn to Fed Chair Janet Yellen as she assess U.S economic outlook in Chicago. Markets will be keenly attuned for any rhetoric that suggest a hike is imminent leaving the AUD open to a move toward and below support at 0.7490/0.75.
Great British Pound
GBP / AUD
1.6030 – 1.6240
The Great British Pound is weaker today when valued against its US counterpart on the back of continued Brexit fears and mixed overnight UK data prints. The Sterling slipped to a six-week low of 1.2242 against the US dollar in early trade on Thursday after UK's construction PMI for the month of February rose to 52.5 from 52.2. However, the result was mixed as new orders fell. Following from Wednesday weaker-than-expected figures from Manufacturing PMI the data suggests Britain' economy is starting to slow showing cause for uncertainty. Attentions will now turn to today' release of Services PMI for the month of February which are expected to fall from 54.5 to 54.2 from the previous month. The GBP/USD pair is currently at 1.2268, down -0.18% on the day, we now expect support to hold on moves approaching 1.2225 while any upward push will likely meet resistance around 1.2300.
USD, EUR, JPY
A combination of hawkish comments from the Fed and Inflation in Europe increasing the EUR/USD has dragged lower touching levels of 1.0495. Fed Governor Powell said overnight that “the case for a rate increase in March has come together” with markets now pricing in a 92% chance of a hike this month. Over in Europe, the Inflation figure was the highest recorded in four years of 2% for the month of February. With core inflation still being below target and the ECB expected to make no changes to their current monetary policy EUR/USD could start to feel the pressure. Also supporting the Greenback was the lowest number since 1973 of US residents filing for jobless claims, the number of claims for the month ending February 25th edged lower from 242k to 223k which continues to show strength in the labour market. Three more Fed members will speak today as well as the Fed Chair Yellen, expect to see the Dollar well supported as we head into the weekend.
New Zealand Dollar
NZD / USD
0.6960 – 0.7180
Risk appetite dipped overnight as markets continue to price in a potential interest rate hike in March by the Federal Reserve. The New Zealand dollar was one of the worst performing currencies overnight seeing 7-week lows as further Fed Governors were in support of tightening monetary policy overnight. The sell off on Kiwi started within the domestic session testing support at 0.7100 before seeing an eventual low of 0.7050 against the greenback in early morning trading. Domestically we look to ANZ commodity price index figures this morning. All eyes turn to Janet Yellens speech in Chicago tomorrow morning for further clues on economic projections for the coming year. The New Zealand dollar opens this morning at 0.7065 against the greenback and lower against the Australian Dollar 0.9325.
0.7630 – 0.7730
The Australian dollar opens this morning largely unchanged having maintained recent ranges in the face of a wider USD appreciation. Having moved toward intraday lows at 0.7636 in early trade the Aussie rallied strongly advancing back through 0.7650 and again pressing on a move through 0.77. Buoyed by an uptick in 4th quarter GDP the AUD found support as investors extended their neutral monetary policy expectations. Gains were however subdued as investors managed positions through Trump' congressional address. Despite moving away from his staccato oratory style and delivering what can be best described as a more Presidential tone Trump still failed to deliver specific plans for infrastructure and tax reform. As a result, rate expectations overshadowed the President' comments as the likelihood of a March rate hike jumped. Hawkish commentary from key fed officials through the last week has seen a marked increase in those expecting a rate hike in two weeks’ time with the CME Group' Fed watch tool jumping from 35% to 66%. The possibility of a narrowing AUD yield capped gains and the Aussie opens this morning buying 0.7676 U.S cents.
1.5900 – 1.6100
The Great British Pound is weaker today when valued against its US counterpart as Brexit concerns continue to weigh on the currency again. On the back of weaker-than-expected economic data the GBP/USD pair fell to its lowest level in six weeks trading at 1.2280 in early US trade. Manufacturing PMI for the month of February was a soft print 54.6, its lowest in three months, and down from the previous month 55.9. Data is light out of the UK for the rest of this week with only Construction PMI due out today and Services PMI on Friday. The GBP/USD pair is currently at 1.2284 which is 0.84 per cent down on the previous days close. We now expect support to hold on moves approaching 1.2260 while any upward push will likely meet resistance around 1.2340.
0.7100 – 0.7200
It has been a bearish start for the New Zealand dollar in the month of March as 0.7200 was broken early morning yesterday and traded to an overnight low of 0.7100 cents against the US dollar. The NZD lost 1% despite upbeat overseas trade index figures for the quarter and higher Chinese manufacturing PMI data. Investors were gearing up for Trumps address to congress overnight but failed to live up to the hype giving little details in way of economy policy. We saw overall strength in the dollar as markets continue to price in the potential of a Fed hike in March. Further support mounted as San Francisco Fed President John C. Williams said “it is on the table for serious consideration”. Domestically this morning RBNZ Governor Wheeler has stated that the next official interest rate could be either up or down as a neutral bias in interest rate setting was previously noted in February' monetary policy statement. Movements around interest rate decisions, currently at 1.75% will depend on inflationary risks and global outlooks. The Kiwi dollar jumped close to twenty points on comments by Governor Wheeler but has since dropped back to current levels of 0.7140.
0.7600 - 0.7730
The Australian dollar enjoyed a second consecutive day of stagnant trade struggling to break outside a 30 point range. Despite a strong reduction in the current account deficit, driven by stronger commodities prices, the AUD bounced between intraday lows at 0.7661 and session highs at 0.7694 as investor' square positions ahead of what promise to be a potentially volatile Wednesday. Attentions are squarely tuned to today' fourth quarter GDP print, and while Tuesday' stronger than expected current account report bodes well for a positive uptick any downturn will likely dampen recent AUD positivity and could force a move outside recent ranges. Following the headline domestic data release markets will turn to U.S president Trump as he addresses Congress and is expected to deliver updates and a timeline of implementation against a much expected tax reform policy. Failure to deliver will undo recent hawkish commentary from Fed officials and likely force a wider USD sell off opening the door for a consolidated move beyond 0.77.
1.6100 - 1.6290
The Great British Pound is weaker today when valued against its US counterpart on the back of continued speculation about a possible Scottish independence referendum, at the time the UK is getting ready to leave the EU. The Sterling hit an intraday high of 1.2470 on the back of worse-than-expected US Q4 GDP which came in at 1.9% below the 2.1% expected. Yesterday' GfK Consumer Confidence Survey decreased one point for the month of February to -6. Today attentions turn to Manufacturing PMI for the month February which is forecast to fall to 55.7 from 55.9 the previous month. The GBP/USD pair is currently trading at 1.2383. We now expect support to hold on moves approaching 1.2345 while any upward push will likely meet resistance around 1.2470.
The Euro moved above 1.0600 momentarily touching a high of 1.0630 against the U.S Dollar as Italian inflation was reversed sharply in February, following a large drop January, there was a 0.2% rise las month which brings the annual pace to 1.6%. EUR/USD reversed gains to an eventual low of 1.0572 following a raft of economic data released from the world' largest economy, it was a bit of a mixed bag with quarter four GDP missing expectations rising at an annual pace of 1.9% vs expected 2.1% however, the Conference Board Consumer Confidence Index hit 114.8 in February, up by 3.2 points which was its highest level in sixteen years. The Richmond Fed Manufacturing Index also saw improved numbers rising to 17 in February. In other news Federal Reserve president Harker said overnight that he expects the Central Bank to raise interest rates three times this year, providing that the economy stays on the right track. Over in Japan Industrial Production Output had unexpectedly contracted in January which was the first fall in six months, USD/JPY open this morning at similar levels as yesterday of 11.78. The US President is due to address congress today at AEST 1pm which is the main event markets will be focused on.
0.7080 - 0.7240
The New Zealand dollar advanced higher in overnight trading as a number of data releases saw the US dollar driven lower. Starting the day at 0.7200, we saw a deficit of NZD $285m in New Zealand trade balance figures in January, well short of expectations due to a spike higher in volume of oil imports. This sent the Kiwi lower to an intraday low of 0.7178. United States GDP figures of 1.9% for the 4th Quarter of 2016 missed expectations sending the NZD/USD cross to an eventual high of 0.7235. Highs overnight quickly evaporated this morning, pairing all gains as New York Federal Reserve President Willian Dudley has come out hawkish on CNN, stating the case for monetary policy tightening has become a lot more compelling now sentiment has improved and growth on track at 2% per annum. The New Zealand dollar immediately dropped on comments and opens at 0.7190 ahead of fourth-quarter terms of trade data this morning.
The Australian dollar enjoyed a quiet start to the week maintaining a tight 30 point range throughout trade on Monday. With little macroeconomic data on hand the AUD again tested resistance approaching 0.77 U.S cents before edging lower into the Northern Hemisphere session. Markets were steady as investors square positions ahead of what should be a busy week headlined by commentary for U.S President Donald Trump and fourth quarter GDP numbers. Should Trump proffer a deeper insight into his plans for tax reform and fiscal stimulus there is scope to suggest a short term USD rally could follow, however comments from Treasury Secretary Mnuchin suggest the effects of reform will not be felt until the latter half of the year with a real term impact on growth delayed into 2018. Such an outlook may not fit with the markets expectations for rapid growth assistance and leaves the door open to bolder AUD upside and a push on 0.80. Attentions now turn to New Home sales and Private Sector Credit for macroeconomic direction through Tuesday.
1.6150 – 1.6350
The Great British Pound is weaker today when valued against its US counterpart falling to an overnight low of 1.2431 a two-week low as Brexit fears return. The pound was the main mover overnight following reports that Prime Minister Theresa May could agree to a new Scottish independence vote, but on the condition, it is held after the UK leaves the EU. All attentions now turn to today' GFK Consumer Confidence Survey which is expected to have fallen in the month of February by 6 against the previous months print in January -5. The GBP/USD pair is currently trading at 1.2442. We now expect support to hold on moves approaching 1.2390 while any upward push will likely meet resistance around 1.2520.
The Euro weakened on concerns about upcoming political events, with polls showing independent candidate Macron leads over the Republican Fillon and shortens the gap against the National Front Leader Marine Le Pen. Many believe if Le Pen does win, she could lead France out of the Eurozone, EUR/USD retracted from 1.0630 to 1.0580. A mixed bag of macroeconomic data out of the US saw the Japanese Yen appreciate against the Greenback touching 112.74, as strong US Durable Goods climbed 1.8% in January and the Dallas Fed Manufacturing Index rose from 22.1 in January to 24.5 in February, however, Pending new home sales fell unexpectedly in January by 2.8%. With Trump' first major policy address to Congress today markets will keenly watch for further clues on his key policy agenda, such as tax reforms and infrastructure spending.
0.7130 – 0.7250
The New Zealand dollar consolidated its position above 0.72 U.S cents, trading sideways in a tight twenty-point range in domestic trading on Monday. Visitor arrivals were positive for the month of January, boosted by annual Chinese New year holidays. Main movements overnight were US dollar weakness due to a combination of disappointing core durable goods orders and home sales in the United States. The Kiwi hit an overnight high of 0.7227 against the greenback before pairing all gains to open at 0.7192 this morning. Investors look to Trade balance figures where it is possible figures could return to surplus for the month of January.
0.7625 – 0.7740
The Australian dollar edged lower into the weekly close sliding back below 0.77U.S cents despite wide spread USD weakness. The Greenback gave up losses against the Yen and a basket of major currency counterparts as investors question the likelihood of swift amendments to U.S tax reform and increased fiscal stimulus. The AUD has struggled to hold onto gains enjoyed above 0.7690/0.77 having found itself largely range bound between 0.7630 and 0.7730. Having failed to break resistance at 0.7730 the Aussie appears at the top of its recent rally, however should GDP swing higher there is scope for further upside. Despite a string of reasonable macroeconomic indicators the expected interest yield between Australia and the US remains largely unchanged with the RBA likely to maintain record low interest rates. Wednesday' GDP print may be the catalyst needed to break the cycle of neutral monetary policy. A poor print will mark a 2nd consecutive quarterly decline and by technical definition push the economy into recession opening the door to a possible rate cut. Attentions today turn to the U.S docket for headline macroeconomic indicators.
1.6150 - 1.6350
The Great British Pound opened this morning little changed when valued against its US Counterpart with the pair retreating from a weekly high of 1.2569. During Friday' session BBA Mortgage Approvals surged to their highest in a year in January, up to 44.7K mortgages in January, and up from 43.6K in December. ON the local data front this week it begins with Wednesday' Manufacturing PMI for the month of February with markets forecasting a reading of 55.5. Mortgage Approvals will also be released on Wednesday for the month of February. Rounding off the week Construction PMI on Thursday is forecast at 52.4. Services PMI on Friday is forecast at 54.2. The GBP/USD pair is currently trading at 1.2457. We now expect support to hold on moves approaching 1.2430 while any upward push will likely meet resistance around 1.2485.
Still playing on the back of investor minds last week were the minutes of the Federal Reserve which have dampening demand for the world' largest reserve currency, they revealed the Feds uncertainty with Trump' economic agenda. USD/JPY closed the week down at 112.14, having reached 113.77 earlier in the week. Through mixed bag of economic data out of the US the Euro initially gained touching levels of 1.0618 before falling back into negative territory. U.S New Home Sales rose by 3.7% which came in under expectations of 6.3% and in a separate report the University of Michigan confirmed the Consumer Sentiment Index hit 96.3 this month, slightly above expectations. Support for the EUR/USD sits at 1.0520, any moves held above 1.0600 could favour a recovery in the pair.
0.7130 - 0.7245
The New Zealand dollar traded in a tight range last week testing resistance levels at 0.7240 on Friday evening. With little domestic news on Friday, markets were flat leading into the American session. U.S new home sales were softer and consumer sentiment dropped for the first time since Trumps election win. A busy week for economic data both domestically and offshore kick started by local Visitor arrival numbers and Trade balance figures on Tuesday. The Kiwi opens this morning at 0.72 against the US Dollar.
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