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AUD / USD
0.7450 – 0.7550
The Australian Dollar continued its downward trend of the week and touched another new two-month low overnight of 0.7490 against the US Dollar as further positive data from the States was realised overnight. US Import prices were stronger than expected for February, driven primary by an improvement in the import prices of nonpetroleum prices products. Despite US Initial Jobless claims increasing slightly for the week ending March 4th, overall the numbers still remain low and continue to point to a tightening in the labour market. On top of yesterday' strong ADP numbers tonight' non-farm payroll data is expected to firm the case for a rate hike next week by the US Federal Reserve. Local data due out today is January Home Loans, the number of approved loans granted for owner-occupied homes is expected to dip.
Great British Pound
GBP / AUD
1.6170 – 1.6270
The Great British Pound stalled its current downtrend finding support at 1.2140 in the European session. Movement was minimal, trading in a fifty-point range post UK' annual budget. Minimal UK data once again saw flows determined by US dollar strength as jobless claims came in near expectations for the week ending March 4th. UK markets look to a number of data events including Manufacturing production and inflation expectations before focus shifts to Non-Farm employment figures in the United States. Sterling opens this morning at 1.2175 against the greenback.
USD, EUR, JPY
The US Dollar continues to strengthen ahead of next week' interest rate announcement by the Federal Reserve on March 15. Last week Federal Reserve' Janet Yellen said that any interest rate move will depend on inflation and employment maintaining the current levels. Therefore, all eyes will be on today' Non-Farm Payrolls report which will be a key factor in the Federal Reserve decision to raise rates next week. The market expects 190,000 jobs to have been added in February as compare to 227,000 in January. The EUR/USD pair is currently trading at 1.0576. We now expect support to hold on moves approaching 1.0520 while any upward push will likely meet resistance around 1.0600. Opening marginally stronger this morning the US dollar is current trading at 114.96 versus the Japanese Yen and 1.2170 versus the Pound Sterling.
New Zealand Dollar
NZD / USD
0.7240 – 0.7340
The New Zealand Dollar edged marginally lower through trade on Thursday breaking support at 0.6900 and touching intraday lows at 0.6890. With little macroeconomic data on hand the NZD was driven by wider directional flows and U.S interest rate expectations. CME' Fed watch tool now shows 91% of market participants pricing in a rate hike next week with attentions today squarely focussed on non-farm payroll numbers as a key and final marker guiding Fed decision making. A strong read could all but sure up an upward rate announcement and see the NZD test trend lines. A break below 0.6860 could signal a deeper correctional shift and opens the door to moves toward 2015 lows.
0.7450 – 0.7600
The Australian Dollar has once again failed to hold onto the 76c handle and has suffered at the hands of an appreciating US Dollar. The local unit touched 0.7609 in the afternoon but with no local data releases yesterday to support the Aussie the unit began to drag lower through European and US trade to touch an eventual low of 0.7529, a level not witnessed since January 30th. Assisting Greenback strength was a bullish U.S ADP number, the private sector recorded that 298,000 jobs were added to the private-sector in February, the most in many years. AUD/EUR and AUD/JPY also lower at 0.7140 and 86.10. The economic calendar for Australia remains light for the rest for the week, with only Home Loans due out tomorrow.
1.6050 – 1.6250
The Great British Pound received no favours overnight from UK' Annual budget report as the downward spiral continued for a third consecutive day and saw seven week lows. The cable cross flatlined during the Asian session keeping its head above 1.2210 before the selloff continued during the European session overnight, reaching an intraday low of 1.2140. Chancellor Philip Hammond released his first Budget providing improved growth forecasts of 2% for the year, believing it will put the UK in a strong position ahead of their exit from the European Union. Despite the short term outlook Chancellor Hammond expects the growth rate to be revised downwards in 2018 and beyond. That along with a stronger Non-farm employment reading in the United States continued to put a dampener on the Pound. Sterling is currently trading at 1.2170 on open against the US Dollar.
0.6850 – 0.6980
The New Zealand Dollar has slipped to a two-month low overnight of 0.6904 on the back of a rising US Dollar index. Intraday economic data released didn’t really move the NZD/USD pair, a report showed that Manufacturing volumes fell 1.8% in the December quarter which was led by lower by falls in meat and dairy. Over in the US, economists had predicted that US companies would add 183,000 jobs to the private sector however the ADP reading came in at a staggering 298,000 well above expectations, construction and manufacturing were the leading sectors. The number firms expectations of a US Federal Reserve rate hike next week. Further downside risk is on the cards with 0.6860 seen as the next support level.
0.7500 - 0.7650
The Reserve Bank of Australia yesterday kept its cash rate on hold at 1.50% as was widely expected. The tone of the accompanying statement was rather upbeat as they continue to see an ongoing global recovery and local inflation is expected to remain low for some time. They mentioned that “an appreciating exchange rate could complicate the adjustment process”. The RBA is likely to remain sidelined this year. The AUD moved intraday to a high of 0.7633 but once again the price was driven by next week' Federal Reserve meeting on March 15th despite the US trade deficit widening to US$48.5 billion in January which is the largest since March 2012. The local unit is currently buying 0.7590 against the Greenback and lower both against the Euro and Yen.
1.6000 - 1.6150
The Great British Pound continued its downside movement breaking through 1.2200 overnight against the US Dollar. Highs of 1.2250 were ephemeral, with a combination of weaker sales figures and an annual decline in UK house price growth the catalyst for Sterling weakness. Furthermore, Prime Minister Theresa May has been defeated for the 2nd time in House of Lords. An Amendment to the Article 50 bill overnight gives parliament power the right to have a meaningful vote on the Brexit deal to exit from the European Union. The GBP/USD cross hit intraday lows of 1.2170 before recovering slightly to open the Asian session above 1.2200 support.
It was a quiet day of trading yesterday with limited data releases. During the US session, we saw the release of Trade Balance for the month of January which came in line with expectations of -48.5bn and is currently at a five-year low. During the European session, the main news was the disappointing German factory orders. New orders in manufacturing fell by 7.4% in January which was the largest decline since the Global Financial Crisis in 2009. On the data front, today, another quiet session ahead, attentions will now turn to ECB monetary policy announcement and the US Nonfarm Payroll report later in the week. The EUR/USD pair is little changed this morning currently trading at 1.0567. The USD/JPY pair is also trading in a tight range around 113.96.
0.6900 - 0.7000
The New Zealand Dollar' downward momentum continued through trade on Tuesday following a larger than expected decline in global dairy prices and renewed expectations the U.S Federal Reserve will raise rates next week. The Kiwi' decline deepened as the GDT price index slipped 6.3% following a significant depreciation in whole and skim milk powder prices. Having edged through 0.70 on Monday the dairy driven unit slid toward intraday lows at 0.6955, marking a five percent decline since breaking above 0.73 in early February. The NZD' sell off reflects the narrowing in yield expectations as investors prepare for an increase in U.S interest rates on March 16. A consolidation of moves below 0.6960 could signal further downside risk and a move toward 0.6865 and 0.6820.
0.7500 – 0.7630
The Australian Dollar moved within a tight range intraday between 0.7567 and 0.7595 and barely reacted to yesterday' Retail Sales data. There was a slight rebound in Retail Sales which rose 0.4% in January moving in line with expectations. Looking at an annual basis, growth in sales improved marginally from 3.0% in December to 3.1% in January, the turnaround was led by household goods spending. ANZ Job Ads saw a drop by 0.7% last month however, given the hefty gain of 3.9% in January it still shows the annual growth at healthy levels. As we moved into the European session, the Aussie tested levels of 76c assisted by uncertainty concerning the outcome of the French elections, the gains were immediately reversed as the prospect of a March rate hike next week by the US Federal Reserve is at the forefront of investors’ minds. Today we see the RBA' interest rate decision which will be accompanied by the monthly Statement, markets are expected the central bank to hold and remain neutral on the policy stance, markets have been pricing in a 32% chance that the RBA will raise rates by February 2018. The pair is currently sitting around levels of 0.7585.
1.6000 – 1.6300
The Great British Pound saw further weakness as it hit overnight lows of 1.2220 against the US Dollar as little market news hit the headlines. Starting the day testing highs of 1.23, the Sterling continued its downward trajectory as Janet Yellen all but sealed confirmation a rate hike is on the cards in this month' US Federal Reserve meeting. BOE Monetary Policy Committee Member Charlotte Hogg spoke overnight but gave little insight on the future direction of monetary policy. U.K markets look to BRC retail sales monitor this evening and then onto Chancellor Phillip Hammonds U.K Budget release on Wednesday where it is expected to release monetary figures to set aside for exit from European Union. Cable opens this morning at 1.2235.
The US Dollar ticked higher through trade on Monday amid heightened speculation the Federal Reserve will raise rates next week and increasing political uncertainty in Europe dampened investors’ appetite for risk. Expectations the FOMC will amend its current monetary policy platform continued to broaden, a fact illustrated by another significant uptick in the CME Groups Few Watch Tool. The past week has seen a dramatic shift in market sentiment with 86% of market participants now pricing in a rate amendment, up from just 25% this time last week. The shift in interest rate prospects has forced the Euro back below 1.06 and when coupled with increasing uncertainty surrounding the outcomes of the Dutch and French elections the Euro is vulnerable to further downward pressures. The Euro suffered increasing uncertainty overnight after Former French PM Allain Juppe stood aside and ruled out replacing scandal ravaged centre right candidate Francois Fillon. The decision opens the door to nationalist Marine Le Pen with investors wary of a Brexit or Trump style surprise. While election turmoil and speculation continue the Euro will likely remain subdued and a move back toward 1.0350 – 1.04 is a real possibility.
0.6950 – 0.7050
The New Zealand slumped lower through trade on Monday moving through the psychological 0.70 handle to touch intraday lows at 0.6961. With little domestic macroeconomic data on hand to drive direction the NZD was at the mercy of wider risk flows and broader USD sentiment. Increasing expectations the Federal Reserve will raise bench mark interest rates next week drove the USD higher as the threat of a narrowing in the Kiwi' yield advantage forced investors away from the commodity driven unit. With attentions now turned to key Non-farm payroll numbers Friday as the final hurdle ahead of next week' FOMC meeting investors will be keenly attuned to Wednesday Dairy trade auction for interim direction.
0.7560 – 0.7760
The Australian Dollar reacted little to Friday' AIG Services Index data, the index fell 5.5 points to 49, with only one out of the five activity sub-indexes above 50, results above 50 points indicate expansion. The AUD/USD moved intraday lower to 0.7542 ahead of the Fed chair speech, however markets reacted surprisingly to the downside after the speech pushing the Aussie towards 76c. Janet Yellen pointed towards a rate hike this month should employment and inflation continue to move in line with their expectations. Despite the recovery of AUD/USD, short-term trend is moving in favour of the Greenback.
1.6200 - 1.6700
The Great British Pound declined against the majority of its counterparts last week falling from highs of 1.2475 against the US Dollar on renewed risk of a request for a second referendum by the Scottish. UK February Services PMI figures were disappointing on Friday evening sending the Cable cross to a seven-week low of 1.2220. Domestically the UK looks to Wednesdays Spring Budget with an assessment of GDP growth and impact of rising inflation expected to be addressed. The Sterling has recovered slightly to open at 1.2290 against its US counterpart along with the Australian dollar (1.6190) and Kiwi (1.7485)
The US Dollar finished the week higher across the board with investors searching for fresh clues about a possible rate hike at the next official FOMC meeting in March. The market is now pricing in a 94 percent probability of a 25 bps increase to the official range at the March 15th meeting. On the back of this the US Dollar will be well supported this week. Attentions will now turn to today' release of US factory orders, along with revised durable goods orders for the month of January. The Euro has been well supported of late with the release stronger than anticipated data sets. On Friday Markit services PMI neared a six-year high, up to 55.5 from previous 53.7. The EUR/USD pair is currently trading at 1.0621. We now expect support to hold on moves approaching 1.0520 while any upward push will likely meet resistance around 1.0635. Opening marginally stronger this morning the US dollar is current trading at 113.90 versus the Japanese Yen and 1.2293 versus the Pound Sterling.
0.7240 - 0.7340
The New Zealand dollar sunk to a two month low through trade on Friday as investors looked to bolster the world' base currency on expectations a March rate hike will be proffered. Tumbling through 0.7050 the Kiwi touched fresh lows at 0.7011 after Fed Chair Janet Yellen suggested the Federals Reserve' Open Market Committee would likely raise rates later this month should macroeconomic data continue to cooperate. The U.S has enjoyed a string of stronger than anticipated data sets of late prompting the Fed to bring forward a possible rate hike thus narrowing the NZD' yield advantage. In contrast the RBNZ looks set to maintain its current monetary policy platform after Governor Wheeler suggested the Board was unlikely to adjust rates this year. This juxtaposition of monetary policies could see the New Zealand dollar unwind recent gains and extended losses back below the psychological 0.70 handle as attentions turn local dairy prices and U.S labour market date for direction through the week.
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