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AUD / USD
0.7380 – 0.7450
The Australian dollar advanced higher from its open last week of 0.7395 after broad US weakness and a drop in Australia' unemployment rate to 5.7% in April. A combination of a rebound in commodity prices and rising geopolitical risk after further turmoil by the Trump administration saw the Australian Dollar rally to a monthly high of 0.7470 on Friday evening. RBA policy minutes on Tuesday saw no real changes from April, with a neutral bias expected on rates for the remainder of 2017 and into 2018. We expect a quiet day on the markets with no domestic macroeconomic data released till tomorrow. The Australian dollar opens at 0.7455.
Great British Pound
GBP / AUD
1.7350 - 1.7550
The Great British Pound (after several attempts) late last week closed Friday' session above the 1.30 handle and reached an eight-month high of 1.3039 against the U.S Dollar. The pair edged higher assisted by UK CBI Industrial Order Expectations which asked UK manufactures to rate the relative level of order volumes expected for the next three months. The survey showed an improvement on April and output growth accelerated in the three months to May. Expectations were to hold at 4 however, orders surged to 9 this month, their highest in two years buoyed by stronger than expected domestic demand combined with rising demand from overseas. The GBP/USD pair is currently trading at 1.3020. On the technical side, we now expect immediate support at 1.2970 followed by 1.2900 with the pair seeing strong static resistance around 1.3060. Looking ahead, sees the release of UK' Rightmove House Price Index (HPI), it is viewed as a leading indicator of the housing industry' health.
USD, EUR, JPY
The U.S Dollar' downward spiral continued throughout trade on Friday as the world' base currency extended losses, marking its worst weekly performance in 13 months. Nervousness surrounding heightened political risks plagued the dollar for much of last week as markets develop concerns the Presidents meddling in FBI probes may be grounds for impeachment. The Dollar index fell some two percent touching lows not seen since Trumps election victory on November 9. The Dollar tumbled against safe haven assets, marking sharp declines against the JPY and CHF while commodity linked currencies found support in robust oil prices and the Euro resurgence continued. The 19 nation single unit currencies advance continued through last week as investors pare USD losses and shift support behind expectations the ECB will soon begin tempering its accommodative monetary policy platform amid improved macroeconomic indicators. The Euro jumped some 2.5% through trade last week and comfortably cruised through the psychological 1.10 opening this morning at 1.1205. Attention this week turn to FOMC meeting minutes, ECB President Mario Draghi and U.S GDP numbers while U.S political machinations continue to manage direction.
New Zealand Dollar
NZD / USD
0.6830 - 0.6980
After a quiet week on the domestic data front the New Zealand dollar opens this morning little changed when valued against its US Counterpart. The NZD/USD pair is currently trading at 0.6932. We now expect support to hold on moves approaching 0.6818 while any upward push will likely meet resistance around 0.6969. Looking at the week ahead there are no scheduled data releases for today and tomorrow with all attentions turning to Wednesdays Trade Balance and Thursday' Annual Budget Release. The Kiwi was also little changed against the Aussie Dollar at 93.01 (1.0751) and the Pound Sterling at 53.15 (1.8814).
0.7320 – 0.7500
1.7300 - 1.7600
During the UK session the Great British Pound rallied to a fresh 8-month high of 1.3047 against the Greenback following the release of strong UK Retail Sales figures which jumped by 2.3% on a monthly basis. On the back of impressive April retail sales figures the GBP/USD pair finally broke through the 1.300 level. However, the U.S. dollar briefly surged against major currencies Thursday afternoon in a move traders initially could not explain. The Pound Sterling lost over 100 pips in a matter of seconds. The GBP/USD pair is currently trading at 1.2943. We now expect support to hold on moves approaching 1.2900 while any upward push will likely meet resistance around 1.2995.
The US Dollar has rebounded overnight supported by positive US macroeconomic data, the Philadelphia Manufacturing Index unexpectedly improved in May jumping to 38.8 from a reading of 22.0 in April - the expectation was a drop to 19.5. Assisting the strength of the Greenback were the number of people who filed for unemployment in the US, Jobless Claims dropped by 4,000 which is showing continuing strength in the labour market. Meanwhile in Europe minutes from the latest meeting revealed that policymakers may looking at pulling back on stimulus given the improving outlook for the economy. EUR/USD has retreated down from 1.1172 to 1.1075 and USD/JPY currently buying 111.39
0.6810 - 0.6950
The New Zealand dollar has stalled in its attempt to push through the 0.70 cent handle against the American dollar, a level not seen now since mid-April. Hovering around May 8th resistance levels of 0.6950, the NZD/USD cross pulled back on general US Dollar strength overnight after a boost in economic data out of the United States. Seeing an intraday low overnight of 0.6885, the Kiwi looks to recover above the 0.6900, and opens this morning at 0.6895.
0.7340 – 0.7500
1.7400 - 1.7600
The Great British Pound is stronger today when valued against its US counterpart. Despite ending the day higher against the Greenback, the British Pound failed again to hit 1.3000, reaching an overnight high of 1.2990. Yesterday on the data front, the unemployment rate fell to 4.6% in the three months to March, the lowest in over four decades. Looking ahead today will see the release of April retail sales with expectations of an increase by 1.0% in the month after March's 1.8% decline. The GBP/USD pair is currently trading at 1.2970. We now expect support to hold on moves approaching 1.2900 while any upward push will likely meet resistance around 1.2995.
The Greenback has extended further losses on the currency front when valued against its major counterparts. The US Dollar Index which measures the USD' strength against a trade-weighted basket of six currencies closed at 97.39 and down 0.80% - a fresh six-month low. The US Dollar has come under pressure after news broke that President Trump has asked former FBI Director James Comey to end the agency' investigation into ties between former White house national security advisor and Russia. EUR/USD has benefited, moving towards an eventual high of 1.1170 also assisted by weaker US housing data and odds for a June rate hike dropping further according the CME' FedWatch Tool. In a separate note Japanese Machine Orders were less than expected rising 1.4% in March vs an increase of 2.6%, despite the data raising concerns about the outlook for Japanese business investment USD/JPY has weakened further touching a three-week low.
0.6840 - 0.6980
It was a relatively quiet session on domestic markets yesterday as the New Zealand dollar traded in a tight twenty-point range between 0.6880 and key resistance levels at the 0.6900 handle. The New Zealand March quarter reading for PPI was higher than expected as producer prices continue to climb. This was due to higher prices in dairy products and crude oil but this did little to move the Kiwi on release. Most movements in the NZD were in the North American session as political unrest took place once again in the United States. Equities were sold off, along with the US Dollar with the NZD/USD being one of the main beneficiaries hitting an overnight high of 0.6945. This morning these levels are being tested as the New Zealand dollar opens at 0.6940.
0.7360 – 0.7500
The Australian dollar held onto Monday' gains throughout trade on Tuesday bouncing about a 40-point range. Softer than anticipated U.S housing data added to a string of weaker macroeconomic data sets casting doubt over the strength of the broader economy and a shadow over expectations surrounding monetary policy tightening. Investors’ concerns President Trump will be unable to deliver the economic stimulus promised throughout the election campaign continues to escalate as suggestions political noise will drown attempts for reform and possibly force the President from office before his term is through. The Aussie dollar held above 0.74 for much of the day touching intraday highs at 0.7437. With little direction derived from the RBA' minutes as the boards meeting account offered nothing not already addressed in previous rate statements. Attentions now turn to labour market data Thursday for direction and a possible upside extension.
1.7300 – 1.7600
The Great British Pound is stronger again today when valued against its US counterpart reaching an overnight high of 1.2957. UK inflation figures yesterday came in better than expected printing a 2.7% yearly basis, above the 2.6% expected and previous 2.3%. Producer prices inflation was also higher than expected, with factory output prices up by 0.5%. Higher inflation usually means that the Bank of England would be a step closer to rising rates. However, all attention will still remain focused on Brexit. Today all eyes will be on the UK Unemployment Rate Decision with expectations the jobless rate will remain steady at 4.7 percent. The GBP/USD pair is currently trading at 1.2918. We now expect support to hold on moves approaching 1.2890 while any upward push will likely meet resistance around 1.2950.
Having remained between levels of 1.0900 and 1.1000 intraday yesterday the Euro broke key resistance of 1.1000 against the US Dollar overnight to touch a fresh six-month high of 1.1097 . The Greenbacks decent began with German ZEW economic sentiment survey improved in May, suggesting optimism about the economic conditions in Q2 2017. Demand for the Euro continued as US Housing Starts fell by 2.5% in April, missing consensus expectations for a 0.2% lift and concerns about the Trump administration weighed on the Dollar. Meanwhile, USD/JPY continues to move south currently changing hands at a one-week low of 112.73 at the time of writing.
0.6820 – 0.6950
The New Zealand Dollar held ground over the last 24 hours, trading in a tight 40 point range. Supported by renewed strength in Oil and commodity prices the Kiwi hit an intraday high of 0.6905. Overnight the latest Global Dairy Price Auction rose to 3.2% and was the fifth consecutive month of increases. Despite the rise, there was little movement in the NZD/USD cross as sideways movements were maintained. Domestically the market looks to price of goods release today as the New Zealand dollar opens this morning at 0.6885.
0.7330 – 0.7440
1.7300 – 1.7500
The Great British Pound is stronger today when valued against its US counterpart. After bottoming out near 1.2840 on Friday, the pound sterling managed to regain the 1.2900 handle reaching an overnight high of 1.2940. There were no macroeconomic releases in the UK yesterday. Today however attentions turn to multiple inflation figures for April, which if higher-than-expected, could result in a stronger Pound. The GBP/USD pair is currently trading at 1.2901. We now expect support to hold on moves approaching 1.2840 while any upward push will likely meet resistance around 1.2930.
The U.S Dollar remained on the back foot yesterday as US Empire State Manufacturing Index fell six points to -1.0 in May. In the survey, the firms that did respond showed a drop in new orders which was under zero for the first time in several months at -4.4. On the employment front, indexes remained positive in both employment and hours worked pointing towards continued improvement in the labour market. The softer than expected print supported EUR/USD pushing the pair towards 1.0989 as well as the CME FedWatch Tool moving from an 80% to 70% probability of a June rate hike. Meanwhile in China, retails sales rose 10.7% for the year to April which was down from the previous months reading, industrial production was up by 6.5% but missed expectations for a 7.0% increase, suggesting momentum in economic growth eased slightly in April.
Buoyed by an uptick in commodity prices the NZD edged higher through trade on Monday breaking briefly above the 0.69 handle to touch intraday highs at 0.6917. Having tested key technical supports at 0.6830 in the wake of the RBNZ decision to maintain its neutral monetary policy platform into the foreseeable future the Kiwi has found reasonable support turning higher as investors correct positions following softer than expected U.S Manufacturing data. With the NZD' yield advantage expected to narrow come next months fed meeting the NZD could test new 2017 lows with a break below 0.6810/30 opening the door to a deeper correction toward 0.6750. Attentions today turn to RBA meeting minutes and commodity prices for near term direction.
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