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By JOEL HOLMES

Dollar Weakens – Consumer Confidence Wanes


Australian Dollar

AUD / USD

Expected Range

0.7400 – 0.7500

Following yesterday' Australian Building Approvals report the local unit faced some selling pressure and tested short-term support levels near 0.7420 in early morning trade. The data showed a bounce back from March numbers increasing 4.4% vs an expected 3% with a yearly reading of -17.2%. The recovery in the numbers were led by a 9.6% increase in approvals for new apartments and showing more homes are being built than ever. With a heavy supply vs demand in the market economists are expecting to see house prices to ease somewhat. Overnight the AUD/USD pair recouped losses made earlier and strengthened thanks mainly to a weaker Greenback touching a high of 0.7469. The Aussie has notably been pushing lower, if the Aussie remains below resistance of 0.7608 there are some strong downside risks and expected to move back below 0.7400. Attention now focused on tomorrows first quarter Capital Expenditure and Retail Sales data.

Great British Pound

GBP / AUD

Expected Range

1.7000 - 1.7280

Having edged marginally higher through trade on Tuesday the great British Pound moved sharply lower through early trade on Wednesday after pre-election polls suggest the Conservatives may fall short of claiming an overall majority. Sterling plunged back through 1.2850 to immediately test supports at 1.2800. Uncertainty surrounding the election has plagued the Pound through the last week and forced a sharp correction in expectations for future Brexit negotiations. Should Prime Minister May fail to expand the Conservatives majority already difficult Brexit negotiation will become that even more untenable. With little of note on the macroeconomic docket today changes in the political landscape leading into the election will continue to dominate and drive direction. We are watching a break below 1.28 before extended moves toward 1.2710 and 1.2620.

Majors

USD, EUR, JPY

Expected Range

N/A

The US dollar has weakened across the board as major markets ramped up flows from long weekend holidays. The U.S. Dollar Index (DXY) is down 0.25% for the day as United States CB consumer confidence dropped to its weakest number since February as “Good” business conditions edged lower. Dallas Fed President Robert Kaplan has further supported two more interest rate hikes this year in an interview with CNBC overnight as he sees growth in the 2-3% region. The current CME Fedwatch tool shows a 89% chance that a 25bps interest rate increase will occur at the June Fed meeting. Both equities and commodities traded flat with 10-year treasury yields down 3bps to 2.21%. Despite being hit by low inflation reading as in Germany and Spain, the EUR/USD advanced to the 1.12 handle after a late dollar selloff with further cues to come out of the European region this evening as core inflation and the jobless rate takes focus. Yen strengthened yesterday on safe haven bids along with a strong retail sales boost. The Japanese unemployment rate was steady as the USD/JPY cross moved to a two-week low of 110.70 overnight.

New Zealand Dollar

NZD / USD

Expected Range

0.7050 - 0.7150

The New Zealand Dollar advanced overnight against its US counterpart reaching a fresh high of 0.7101, it' the first time the Kiwi has traded above 0.71 US cents since early March. The US core PCE price Index rose 0.2 per cent in April, above market expectations but the lowest annual inflation in about 18 months. Locally yesterday Building consents for new homes fell in April, partly due to the timing of Easter. The seasonally adjusted number of new homes fell by 7.6 percent in April compared with the previous month. Well below market expectations. Today attentions turn to ANZ's business confidence survey for the month of May. The NZD/USD pair is currently trading at 0.7091.

By JOEL HOLMES

Dollar steady as key markets closed for holidays


Australian Dollar

AUD / USD

Expected Range

0.7400 – 0.7500

The Australian Dollar barely moved yesterday, with markets in the U.S, the U.K and China closed observing public holidays the local unit has been confined between a low of 0.7426 and a high of 0.7450. Markets ignored news of a third missile test within three weeks by North Korea which landed in the sea between Korea and Japan. With recent local economic indicators being mixed it has raised some concerns on the strength of the Australian economy and therefore all eyes will be closely watching Building Approvals due out later this morning. The forecast is to rise by 3% in April following a large drop on 13.4% in March. On the technical side, the charts are indicating a lower trend, if the pair holds above 0.7423, the near-term resistance sits at 0.7484. However, failing this the pair could grind lower to 0.7400.

Great British Pound

GBP / AUD

Expected Range

1.7200 - 1.7300

The Great British Pound steadied through trade on Monday having found support following Fridays bout of heavy selling. As most Britons enjoyed an extended weekend in observance of the Spring Bank Holiday volumes remained thin yet with little macroeconomic data to drive direction volatility did little influence traders and Sterling edged marginally higher. Weekend polls showed Prime Minister May will win next week' election however concessions will need to be made amongst those expecting a landslide victory. The trend through the past two weeks has seen the Conservatives lead narrowed and while the Prime Minister can be confident in returning to Downing street the majority she hoped to gain in the house and commons is unlikely to eventuate making Brexit negotiations that much harder. Attentions today remain with electoral expectations for direction as the macroeconomic docket remains free of headline data sets.

Majors

USD, EUR, JPY

Expected Range

N/A

It was a light on trading day for the start of the week as United States, United Kingdom and China all observed public holidays. On low liquidity, there was little movement on currency markets as the US Dollar index saw one of its tightest trading range this year and up 0.05% for the day. This week sees key macroeconomic data out of the United States with CB Consumer spending this evening. On Friday Non-Farm Employment is released for May, which could give further influence to the Feds upcoming monetary decision in June. Fed reserve member John Williams reconfirmed his view in his speech yesterday in Singapore that three interest rate hikes currently makes sense for the US economy. EUR/USD was steady overnight hitting an intraday high of 1.1190 before news out of German press – Bild early this morning without citing sources, that the Greek government is possibility looking to go without bailout payment should creditors not agree on debt relief. This sent the cross immediately lower to 1.1135. USD/JPY was steady overnight and sits at 111.20 ahead of Japanese retail sales and its unemployment rate released this morning for the month of April.

New Zealand Dollar

NZD / USD

Expected Range

0.7000 - 0.7100

With the bank holiday in the US yesterday trading was relatively subdued. The New Zealand Dollar opened slightly weaker when values against its US counterpart currently trading at 0.7044. We now expect support to hold on moves approaching 0.7015 while any upward push will likely meet resistance around 0.7097. The Kiwi touched a three-week high against the euro overnight after European Central Bank President Mario Draghi said the European region still requires more stimulatory monetary policy. The NZD/EUR currency pair is currently trading at 0.6326. On the economic data front, today all eyes will be on Building Consents for the month of April. It's a leading gauge of future construction activity.

By JOEL HOLMES

US Dollar gains on stronger GDP print


Australian Dollar

AUD / USD

Expected Range

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

Expected Range

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.

Majors

USD, EUR, JPY

Expected Range

N/A

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

Expected Range

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.

By MATT RICHARDSON

Aussie tumbles as Oil prices plunge


Australian Dollar

AUD / USD

Expected Range

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.

Great British Pound

GBP / AUD

Expected Range

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.

Majors

USD, EUR, JPY

Expected Range

N/A

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.

New Zealand Dollar

NZD / USD

Expected Range

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.

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.

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