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BY JOEL HOLMES

Market turns its attention to US Federal Reserve Decision


Australian Dollar

AUD / USD

Expected Range

0.7450 - 0.7650

The Australian dollar paused for a break yesterday having rallied the day prior following an increase in commodity prices. The local unit traded yesterday between 0.7579 and 0.7540 having fallen at the beginning of the day after the NAB's business conditions index fell in February to 7 from 10 in the previous month. Another quiet session locally is expected ahead today with the only release Westpac-MI consumer sentiment index for March due out at 10.30am AEDT. All eyes will be on the Federal Reserve interest rate decision with markets all but certain pricing in a 0.25% rate rise. The AUD/USD pair is currently trading at 0.7559, down 0.19% for the session.

Great British Pound

GBP / AUD

Expected Range

1.6000 - 1.6200

The Pound relinquished all gains made on Monday against the Greenback and pulled back under the 1.22 handle to touch an eventual low of 1.2109. The main catalyst for the move came after the UK Parliament approved the Brexit bill which paves the way for the government to trigger Article 50 so that the UK can leave the EU. The process is expected to take two years from the moment the Prime Minister invokes Article 50. Further to this, keeping the Pound at bay is political uncertainty as Scotland push for a new independence referendum. As we look ahead into the remainder of the week, the main market moving events include the FOMC decision tonight and UK' employments details which are followed by the Bank of England' interest rate decision. No surprises are expected however the Governor Mark Carney appears reluctant to make any hawkish statements.

Majors

USD, EUR, JPY

Expected Range

N/A

The U.S. Dollar index traded higher overnight and is up 0.4% for the day driven by stronger than expected Producer Price Index. A gain of 0.3% for the month of February and annual gains of 2.2% was the highest since March 2012. EUR/USD declined once again in the European session as it continues to drift lower and tests 1.0600. European Industrial production figures were lower than expected rising 0.9% for the month vs 1.2% expected. In a Reuters poll, results suggest there will be no interest rate rises this year before any changes to its asset purchase program. Macro events dominate headlines this week as market chatter turns to the Federal Reserve decision overnight whereby investors will be keen to see any changes to the “dot plot” guidance into 2018 and 2019. An interest rate hike is now firmly priced into the market.

New Zealand Dollar

NZD / USD

Expected Range

0.6880 - 0.6950

The New Zealand Dollar opened yesterday at levels around 0.6920 and moved within a very tight range intraday before closing the session at similar levels. 70 cents has once again become a resistance level and having moved over 4% lower in 2 weeks seems attractive to sellers. Overnight as Producer Prices figures increased in the USA it had very little impact on the NZD/USD as investors eagerly await the Fed' decision tonight. With the Fed' communication having turned hawkish over recent time markets are now pricing in further hikes this year. Locally, today sees Statistics New Zealand release quarter-four Current Account figures which measures the value between imported and exported goods, the number is expected to decrease to by 0.30% per cent of GDP to 2.6%. NZD/USD currently changing hands at 0.6917 at the time of writing.

BY JOEL HOLMES

Markets unmoved ahead of Fed decision


Australian Dollar

AUD / USD

Expected Range

0.7520 – 0.7600

The Australian dollar advanced against its US counterpart on Monday as Iron ore spot markets sprung back to life. The Iron ore spot price rose by 1.78% to $88.26 a tonne. The AUD/USD pair reached an overnight high of 0.7592. A quiet session expected locally today with the only release being the NAB Business Confidence due out this morning at 11.30 AEDT. However, all eyes this week will be on Thursdays Unemployment Rate Decision which is expected to remain steady at 5.7%. The AUD/USD pair is currently trading at 0.7572. We now expect support to hold on moves approaching 0.7540 while any upward push will likely meet resistance around 0.7620.

Great British Pound

GBP / AUD

Expected Range

1.6050 – 1.6200

The Great British Pound edged higher through trade on Monday bouncing off recent lows and last week' losses to move back through 1.22. Having suffered heavy selling through the last two weeks Sterling shrugged off desultory undertones and found support in general USD weakness and calls for a 2nd Scottish independence referendum. Uncertainty surrounding the UK' exit from the European Union has hampered the Pound' performance however suggestions any vote for independence will not take place until the end of 2018 eased concerns surrounding heightened political risk. Attentions now turn to unemployment numbers Wednesday ahead of the FOMC rate announcement and Bank of England monetary policy statement as key markers in a stacked economic docket.

Majors

USD, EUR, JPY

Expected Range

N/A

As the Federal Reserve meeting looms, yields hit its highest levels this year as the CME fed watch tool price in a 95% chance of a rate hike this week. Markets were calm as the US Dollar index traded slightly higher, with investors now set to focus its attention on the Fed dot plot, where it is predicted a possible shift higher to include four hikes in 2018 and 2019. EUR/USD climbed to a four-week high testing 1.0710, noting a change in Mario Draghi' rhetoric to monetary policy introductory statement. The Euro was then sold off this morning to 1.0650 on comments by the head of Belgian Central Bank Jan Smets to the wall street journal that the removal of such rhetoric does not suggest a change in monetary policy stance by the ECB. There was little change to USD/JPY positions as it traded to a high of 114.90 overnight with Bank of Japan expected to make no changes to interest rates and its quantitative easing program.

New Zealand Dollar

NZD / USD

Expected Range

0.6850 – 0.7000

The New Zealand Dollar is weaker today when valued against its US counterpart falling to a 24-hour low of 0.6913 as the Federal Reserve Interest rate decision remains centre stage which is expected to result in the first of a series of rate hikes this year. On the local data front, yesterday Food prices increased 2.2 percent in the year to February 2017, led by higher prices for fruit and vegetables, and dairy products. This was the largest annual increase since December 2011. A quiet session expected locally today with little to no economic data due. The NZD/USD pair is currently trading at 0.6923.

BY JOEL HOLMES

Strong Non-Farm Payrolls supports Fed rate hike


Australian Dollar

AUD / USD

Expected Range

0.7450 – 0.7600

The Australian Dollar is little changed against the US counterpart opening around 0.7540. On Friday Home financing in Australia rose unexpectedly in January, a seasonally adjusted 0.5%, following a gain of 0.4% gain the previous month. A quiet session expected locally today with little to no economic data due. NAB Business Confidence will be released on Tuesday followed by Westpac Consumer Sentiment on Wednesday. However, all eyes will be on Thursdays Unemployment Rate Decision which is expected to remain steady at 5.7%. The AUD/USD pair is currently trading at 0.7544. We now expect support to hold on moves approaching 0.7490 while any upward push will likely meet resistance around 0.7620.

Great British Pound

GBP / AUD

Expected Range

1.6020 - 1.6250

The Great British Pound traded sideways through Friday largely maintaining a 25 point trading band and offered little to excite or push investor expectations. Markets appeared wary of extending positions ahead of next week' highly awaited Fed policy meeting and simply squared levels in anticipation of a quarter point rate hike. With much of market now pricing in the monetary policy shift GBP direction through the short and medium term will be largely governed by the commentary and outlook painted by the Fed. Investors will be keenly attuned to Thursday BoE rate statement in comparing the two central bank policy mandates and subsequently forming wider directional flows. Bouncing off lows at 1.2141 Sterling buys 1.2163 on open.

Majors

USD, EUR, JPY

Expected Range

N/A

Bullish Non-Farm employment figures has all but sealed a rate increase by the U.S. Federal reserve this week as 235,000 jobs were created for the month of February. The U.S. unemployment rate also fell from 4.8% to 4.7% in line with expectations. EUR/USD cross was stronger in Fridays session as European Central Bank' President Mario Draghi signalled a potential tightening in monetary policy for the first time in seven years, pushing the probability for a rate hike in 2017 to 50%. The EUR/USD railed from 1.0630 post US employment data to test 1.07 as Draghi removed rhetoric of using all measures to prop up the economy as bank deposit rates currently sit in negative territory. Focus shifts to central banks this week as United States, Japan and the European Union all release their interest rate decisions.

New Zealand Dollar

NZD / USD

Expected Range

0.6880 - 0.7000

The New Zealand dollar offered little to excite investors through trade on Friday remaining flat and marking a near two percent depreciation through the week as investors position themselves for a much anticipated Federal Reserve rate hike. With little domestic data on hand market participants looked to off shore data sets for direction wherein stronger than anticipated U.S labour market numbers all but guaranteed the FOMC will adjust monetary policy on Thursday. Having touched intraday lows at 0.6894 the Kiwi struggled to extend gains beyond 0.69 and is poised on a critical technical support line. A consolidated break below 0.69 and a deeper move below 0.6860 could signal a wider downward shift and opens the door to moves below 0.68 and toward August 15 lows at 0.62.

BY BRETT OTTAWA

US Dollar continues to strengthen ahead of FOMC meeting


Australian Dollar

AUD / USD

Expected Range

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

Expected Range

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.

Majors

USD, EUR, JPY

Expected Range

N/A

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

Expected Range

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.

BY JOEL HOLMES

Stronger ADP Non-Farm Employment bolsters US Dollar


Australian Dollar

AUD / USD

Expected Range

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.

Great British Pound

GBP / AUD

Expected Range

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.

Majors

USD, EUR, JPY

Expected Range

N/A

New Zealand Dollar

NZD / USD

Expected Range

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.

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