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By MATT RICHARDSON

Cautious FOMC minutes force USD lower


Australian Dollar

AUD / USD

Expected Range

0.7420 – 0.7520

The Australian dollar was marred yesterday by Moody' downgrade in China' credit rating. Initially starting the day at 0.7475 against the US dollar, markets saw a third of a cent shed on the Aussie after news came to light of the first downgrade by Moody' in China since 1989 from Aa3 to A1. The Construction work print for the month also saw a contraction for the month as the afternoon saw an intraday low of 0.7445. The Fed Reserve minutes released overnight supported the view of a “probable” June rate hike with the Greenback reacting negatively to the news, hoping for a more hawkish tone. This caused the Aussie to rally back up and test the 0.75 handle on open this morning.

Great British Pound

GBP / AUD

Expected Range

1.7220 - 1.7430

The Pound Sterling remained under the 1.30 handle during yesterday' day of trade, having moved up towards 1.2994 late in the Asian session. Comments from Theresa May the UK Prime Minister pulled the GBP/USD lower to 1.2927, she said the terror threat level in the country been raised to “critical”, which suggest another attack could be “imminent”. As the US session began, the release of the Federal Reserve minutes saw the US Dollar weaken across the board. They remain cautious in the outlook for inflation but continue to leave the door open for a near-term rate hike. Fundamentally it has been a quiet week in the UK, but that will change today with the release of Second Estimate GDP for the first quarter. This event, which should be treated as a market-mover, is expected to post a gain of 0.3%.

Majors

USD, EUR, JPY

Expected Range

N/A

The U.S Dollar sell off resumed through trade on Wednesday as investors tracked the path of least resistance following the FOMC' May meeting minutes. Analysts and market participants began revising expectations for forward monetary policy after the minutes offered a somewhat dovish undertone and highlighted a cautious approach to tighter interest rates. While investors are still pricing in a June rate amendment the likelihood of the Fed raising rates twice through the end of the year has slipped below 50 percent. While downside moves have been tempered the upside potential will now be closely linked to improving macroeconomic data sets. The Dollar pushed back toward six and a half month lows while the Euro moved back through 1.12 and the Yen forces the Dollar back toward 111.50. As attentions turn to Friday' durable goods orders and Prelim GDP data for macroeconomic direction the pall of political uncertainties will likely weigh on the Greenback through the rest of the week.

New Zealand Dollar

NZD / USD

Expected Range

0.6980 - 0.7120

The New Zealand dollar has maintained its impressive upward trajectory overnight, spending the majority of the past 24 hours above support at the 70 US Cents handle. Rising from lows of 0.6838 which were only witnessed last week, investors have been left disappointed overnight following the release of minutes from the Federal Open Market Committees most recent meeting. Whilst expectations of a rate hike next month have firmed, a clearer picture with reference to future rate hikes was notably absent. Pushing to an eventual high of 0.7058 when valued against its US Counterpart, investors today will be watching the New Zealand governments budget with topside from existing elevated levels to be limited should a conservative fiscal stance be adopted in the context of an economy which is already showing signs of strength. Stronger this morning the Kiwi currently buys 70.42 US Cents.

By MATT RICHARDSON

Aussie breaks back through 0.75 as attentions shift to FOMC


Australian Dollar

AUD / USD

Expected Range

0.7380 – 0.7520

The Australian dollar saw a gradual rally yesterday and popped above the 0.7500 mark in local trading. Starting the Day at 0.7470, we saw the Aussie rally to a three week high of 0.7515 as risk on sentiment continued. The AUD/USD failed to capitalize on gains overnight as a recovery in the Greenback was supported by higher US Treasury yields, with markets positioning themselves before a potential Fed hike in next month' meeting. US Dollar index was 0.4% stronger for the day as decent economic data out of the United States supported the Greenback move with the Australian dollar lower on open at 0.7475.

Great British Pound

GBP / AUD

Expected Range

1.7220 - 1.7420

The Great British Pound has drifted lower following a confirmed terror attack at a pop concert in the Northern England City of Manchester yesterday, tragically 22 people lost their lives and injured more than 59. GBP/USD ended the day near its lows, failing to hold above 1.300 and is also lower against the Euro and Japanese Yen. On the data front the UK' deficit expanded to GBP 9.6 billion, a lot higher that estimates of GBP 8.0 Billion, this has marked the largest deficit since November 2016. The CBI' latest report on the UK' retail sector showed that retails sales had flattened out this month compared with a high increase in April. With rising inflation, households are tightening the purse strings add this to higher import cost pressures from a weaker Pound, it is creating a challenging environment for retailers. On the technical side, we now expect immediate support at 1.2946 followed by 1.2865 with the pair seeing strong resistance around 1.3060.

Majors

USD, EUR, JPY

Expected Range

N/A

The US Dollars downward spiral stalled through trade on Tuesday as investors pared losses and attentions shifted away from recent political uncertainties to the FOMC' meeting minutes and expectations surrounding future rate hikes. Market participants increased bets the Federal Reserve will amend interest rates when it next meets in June despite a string of softer macroeconomic data sets. Voting members on the Fed' Open Market Committee have continued to support a tightening of monetary policy helping prop up the dollar and minimise the impact of recent sell offs. The Euro moved back through 1.12 as profit taking took hold while the dollar forced itself back toward 112 JPY having touched intraday lows at 110.88. Attentions now turn to the day' big ticket item and the FOMC' Meeting Minutes. Analysts will be closely attuned to the commentary and voice accompanying the minutes as a key marker of expectations leading into next month' highly anticipated member assembly.

New Zealand Dollar

NZD / USD

Expected Range

0.6920 - 0.7080

The New Zealand dollar was the day' biggest mover as investors continued to extend recent gains on improving risk appetite. Moving through resistance at 0.7020 the Kiwi touched intraday highs at 0.7047 before moving lower into the daily close. The NZD has enjoyed a run of positive momentum having challenged key supports at 0.6830 just two weeks ago and we could see the dairy driven unit test 0.7050 and 0.71 on the back of upbeat trade balance data and a favourable Fonterra milk price forecast (due this week). Opening at 0.7010 attentions shift to the FOMC and US interest rate expectations for wider direction into the end of the week.

By MATT RICHARDSON

Aussie recovery continues on sustained US political turmoil


Australian Dollar

AUD / USD

Expected Range

0.7380 – 0.7520

The Australian dollar traded in a tight twenty-point range during the domestic session to start the week. Drifting initially on open to a low of 0.7435, we saw US dollar weakness overnight, benefiting the AUD/USD cross to an overnight high of 0.7490. A potential retest of critical resistance levels at 0.75 could occur should risk on sentiment remain in play. Domestically there is little news this week as we look to offshore developments with a keen eye on speeches from several FOMC members before the Fed Reserve meets again on June 15th. The Australian Dollar opening this morning at 0.7470.

Great British Pound

GBP / AUD

Expected Range

1.7280 - 1.7480

The Great British Pound has lost ground against the Greenback as four separate polls conducted by firms for Sunday Papers have found that Labour is advancing at the expense of the Conservatives for the first time in the general election campaign. The GBP/USD also referred to as the ‘Cable’ pulled back under 1.3000 and is currently changing hands at 1.2997 at the time of writing. In a separate report UK' Rightmove House Price Index (HPI), was up for a fifth month in a row according to Rightmove. House prices climbed 1.2% month-on-month to a record GBP 317,281 in May with families with children under the age of eleven are twice likely to shift their houses, Rightmove said. On the technical side, we now expect immediate support at 1.2950 followed by 1.2900/10, approaches to 1.3000 may attract some short term selling.

Majors

USD, EUR, JPY

Expected Range

N/A

The U.S Dollar suffered a further sell off through trade on Monday extending losses and deepening the recent downtrend that has engulfed the worlds base currency. The Dollar moved through 6 month lows when pared against a basket of major counterparts as investors continue to foster concerns surrounding the stability of President Trump' Tenure. The pall that is Trump' interference in FBI probes continues to weigh on the Dollar as market participants are forced to revaluate expectations and manage the likelihood of Trump delivering on pre-election promises. The Greenback moved through 111.50 against the Japanese Yen while the Euro' appreciation continued through 1.1250. Touching intraday highs at 1.1263 the Euro made a new 6 month high, buoyed by comments from Angela Merkel and a suggestion the Euro' weakness was behind Germany' massive trade surplus. As attentions turn to a raft of service and manufacturing data across Europe and the US we expect political turmoil to drive direction through trade on Tuesday and in the lead up to Wednesday FOMC meeting minutes.

New Zealand Dollar

NZD / USD

Expected Range

0.6920 - 0.7050

The New Zealand Dollar surged yesterday as political uncertainty in the US continues to weigh on the US Dollar coupled with a mixed tone of data releases last week. Markets have been watching events unfold surrounding Trump and whether he would be able to deliver on his pro-growth initiatives to help boost the economy. The kiwi moved from 0.6913 to 0.6996 over the course of Monday days of trade, a level not witnessed since ANZAC day. Investors look ahead to tomorrows NZ Trade Balance Report which is anticipated to show a narrowing surplus in April.

By MATT RICHARDSON

Dollar slumps on heightened political uncertainty


Australian Dollar

AUD / USD

Expected Range

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

Expected Range

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.

Majors

USD, EUR, JPY

Expected Range

N/A

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

Expected Range

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).

By SHAMEEM MUSA

Greenback rebounds on positive data


Australian Dollar

AUD / USD

Expected Range

0.7320 – 0.7500

Great British Pound

GBP / AUD

Expected Range

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.

Majors

USD, EUR, JPY

Expected Range

N/A

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

New Zealand Dollar

NZD / USD

Expected Range

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.

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