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AUD / USD
0.7400 – 0.7500
The Australian Dollar closed last week against the Greenback at similar levels where the pair had begun the trading week, the local unit opened at 0.7459 and moved within a 1 US cent range for the week closing at 0.7439 on Friday. Upbeat US data kept a lid on the Aussie on Friday, with preliminary US GDP rising even higher than expected implies more momentum in activity going into the second quarter and US Durable goods falling less than market expectations. First release of local economic data begins tomorrow with Building Approvals which will be watched closely following an unexpectedly large drop in March when they plunged by 13.4%. With Friday' sell-off, on the technical front, the pair sees its first resistance level at 0.7500 following by 0.7560. On the support side, we see levels at 0.7420 followed by 0.7330.
Great British Pound
GBP / AUD
1.7150 - 1.7300
The Great British Pound moved lower into the weekly close on Friday suffering heavy selling pressure in what was otherwise a lacklustre finish to the trading week. The Pound lost some 170 points as pre-election polls showed the conservatives gap over labour has narrowed raising renewed concerns surrounding the political stability of the UK and wider Europe. A weakened Conservative Government would likely prolong the Brexit process and weaken Prime Minster May' position of negotiation. Sterling moved through 1.29 and 1.2850 touching intraday lows at 1.2789 as a slump in consumer confidence numbers extended the downward move before support kicked in and the GBP crept back above 1.28. With little headline data on hand this week attentions and direction will likely be driven by domestic political events as the June 8 election draws ever closer.
USD, EUR, JPY
The US Dollar saw gains on Friday evening as GDP figures were revised up to 1.2% for the first quarter of 2017. Despite having being the weakest reading since Q1 2016, the dollar Index rose 0.2% on a flat end to the week before the memorial day long weekend. Both US equities and treasury yields were steady, with Fed fund futures yields pricing a June rate hike at 85%. Crude oil prices recovered by 1.8% after its previous 5%-day decline. EUR/USD closed the week lower at 1.1170 after hitting a yearly high during the week of 1.1267. Japanese core inflation rose 0.3% on an annual basis and for the fourth consecutive month, driving the USD/JPY to a three day low of 110.90. Losses were paired during the North American session following a positive lead from American data to 111.20. Expect movements to be light on today as holidays are observed in a number of major markets today.
New Zealand Dollar
NZD / USD
0.7000 - 0.7100
The New Zealand Dollar opens this morning weaker when values against its US counterpart. On Friday, the USD moved higher on the back of US first-quarter gross domestic product beat expectations with a revised annual 1.2 per cent in the first quarter, up from an initial forecast of 0.9 per cent. Today there is a bank holiday in the US, and with no economic local news scheduled, traders will likely look for offshore events to drive the direction to the kiwi. The NZD/USD pair is currently trading at 0.7054. We now expect support to hold on moves approaching 0.7015 while any upward push will likely meet resistance around 0.7097.
0.7380 – 0.7520
The Australian dollar neared three week highs in domestic trading yesterday. Reaching a top of 0.7515 and testing the 200-Day moving average, the Aussie failed to advance in Euro markets as West Texas Crude dropped 5% overnight. Subsequently we saw the AUD/USD one of the worst performers overnight, falling 0.8% to 0.7455. With a lack of local macroeconomic data, the Australian dollar continues to move off commodity prices and offshore developments as G7 meeting takes focus. The Australian dollar opens this morning at 0.7450.
1.7220 - 1.7480
The Great British Pound seesawed through Thursday against the U.S Dollar between levels of 1.2931 and 1.3013. UK' Second Estimate of first quarter GDP was revised down to 0.2% vs an expectation of 0.3%, this marks the slowest growth since the beginning of 2016. The slowdown in the economy was driven partly by rising inflation, feeling the pinch are consumer-faced industries such as retail and accommodation. The GBP/USD having spiked above 1.3000 before the data edged lower following the release and is currently buying 1.2940 at the time of writing. Also weighing on the Pound were softer oil prices as OPEC and other major exporters extend their current deal to limit oil production for nine months. On the technical side, we now expect immediate support at 1.2915 followed by 1.2800 with the pair seeing strong resistance around 1.3000.
Investors pared losses through trade on Thursday as the US Dollar steadied in what has been one of its worst weekly performances in over 12 months. The dollar found support in falling oil prices and a correction in commodity linked currencies. Oil plunged more than 4% through trade on Thursday after OPEC failed to deliver wide reaching cuts to production driving the Canadian, Australian and New Zealand dollars lower and adding further clout to a short term dollar bounce. The Greenback edged marginally higher against the Yen pushing back toward 112 while the Euro rally ran out of puff and the 19 nation combined moved marginally lower into the end of the day. Attentions now turn to key U.S macroeconomic data sets in what will otherwise be a relatively quiet final session. Preliminary quarterly GDP data and Core Durable Goods numbers will drive direction into the close and provide an important catalyst and driver of market expectations for future interest rate hikes.
0.6920 - 0.7120
Whilst showing that New Zealand' pace of economic growth is forecast to peak at 3.9 percent in 2019, overall yesterday' budget had a limited impact on the Kiwi. Matching the highs witnessed only 24 hours prior, topside targets of 0.7054 failed to be breached as the world' reserve currency held its ground. Dragging the entire commodity-backed spectrum lower yesterday was an announcement from OPEC signalling that they had agreed to extend production curbs. Opening this morning 20 basis points lower versus the Greenback at a rate of 0.7018, preliminary GDP from the United States this evening will be the key driving force.
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.
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%.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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