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AUD / USD
0.7580 – 0.7690
The Australian dollar edged lower throughout local trade on Wednesday following a marked decline in the number of building projects approved throughout September. The 8.7% decline was well beyond market expectations and signals a possible slowdown in wider construction, a slowdown that may raise red flags within the RBA as construction embodies an important part of the economic rebalancing away from mining. Touching intraday lows at 0.7614 the AUD crept higher, buoyed by widespread USD selling and nervousness ahead of the US Presidential election. The U.S dollar slumped to near three week lows against a basket of major currency counterparts and the AUD rallied through 0.7650 to touch overnight highs at 0.7678. With resistance still firmly entrenched on moves approaching 0.77 the AUD continued to struggle when pushing support and resistance barriers. Attentions today turn to domestic Trade Balance numbers ahead of Fridays all-important U.S labour market data. Anything short of a significant deviation from expectations will likely make little impact ahead of next week' election with markets positioning themselves and preparing for expected volatility.
Great British Pound
GBP / AUD
1.5950 – 1.6150
The Great British Pound has extended gains overnight to reach a three week high of 1.2350 against the greenback as UK construction output rose for the month of October. A reading of 52.6 was the highest since March, driven by an increase in residential work which remains a key growth engine in the construction sector. Political instability ahead of the US Election as the vote for Trump strengthens along with a poor reading on Non-Farm employment figures continues to hamper the US Dollar. The focus this evening turns to the release of Service PMI figures along with the setting of benchmark interest rates by the Bank of England where it is strongly expected that interest rates will remain on hold. The Pound currently tests overnight support at 1.23 on open against the US dollar and is swapping hands against the Australian Dollar (1.6050) and the Kiwi (1.6890).
USD, EUR, JPY
The U.S Dollar sell off continued through trade on Wednesday as the world' base currency touched three week lows against safe haven counterparts with investors adjusting positions amid nervousness surrounding the U.S Presidential Election. Republican, Donald Trump, has narrowed the gap with polls suggesting just 1-2 percentage points separate the candidates a mere one week out from polling day. The Greenback fell through 103.50 against the Yen while the Euro rallied through 1.11 as investors seek haven holdings ahead of what is being dubbed a risk event on par with June' Brexit shock. Political uncertainty overshadowed yesterdays Fed and FOMC policy meeting as the board elected to maintain the current rate structure but hinted they were edging closer to a rate hike. The accompanying commentary adds to calls we will see a rate hike in December however the measured tone suggested to some analysts the timing and pace of rate adjustments will be delayed. CME' fed watch tool now shows just 66.8% predict a rate hike, down 10% from this time last week. Attentions today turn to services data ahead of Non-Farm payroll numbers Friday for direction leading into next week' risk event.
New Zealand Dollar
NZD / USD
0.7140 – 0.7350
The New Zealand Dollar rallied and broke through resistanceat 0.7190 after the release of Employment figures showing the number of New Zealanders employed rose and the number of unemployed fell which paints a robust picture of the local economy. Despite the 1.4% expansion in New Zealand employment, the overall wage inflation remained subdued which may encourage the RBNZ to deliver another rate-cut. Offshore events continued to support the Kiwi as it touched 73c overnight with US ADP non-farm payrolls rose much less than expected dampening optimism over the health of the labour market. NZD/AUD currently sitting at 4-week highs a shade above 94c and close to all-time high against the Pond buying 59p
0.7580 - 0.7730
The Australian dollar enjoyed modest gains throughout trade on Tuesday advancing through 0.7650 after the RBA interest rate announcement and monetary policy statement. The Reserve Bank Board opted to leave the Cash Rate unchanged at 1.5% suggesting the current policy platform is conducive to fostering sustainable growth and improved inflation over time. While the decision was largely anticipated the boards comments suggest that a period of neutrality lies ahead fostering expectations we may now be at the bottom of the most recent easing cycle. Touching intraday highs at 0.7690 attentions now turn to the Federal Reserve and FOMC rate announcement for direction into the weekend and next week' U.S Presidential Election.
1.5900 - 1.6100
The Great British Pound maintained its tight trading range yesterday in the lead up to Thursday' monetary policy meeting. Markets currently price minimal changes from the current interest rate set at 0.25% nor expect any changes in their quantitative easing program. The October reading for UK Manufacturing data released overnight dropped to 54.3 from 55.5 in the previous months reading as manufacturers struggle to cope with higher prices on imports due to the weakening of their local currency. While still showing slow growth it failed to materialise into any gains on the Pound. This evening we look to another round of UK Construction data along with the US Federal Reserve meeting where it is expected that Governor Janet Yellen will continue to keep rates on hold leading into the US Presidential election on November 8th. Against the Greenback we saw a high in early European trading of 1.2280, and is currently trading on open at 1.2240. The Sterling also sees little change against the Australian Dollar at 1.60 and 1.7050 against the Kiwi.
The U.S Dollar sell off continued through trade on Tuesday touching near three week lows against the Euro as uncertainty surrounding the race for the White House escalates. Polling suggests Clinton' lead has all but evaporated as the democratic candidate and her aides fight to extricate themselves from FBI probes into newly found emails sent from Clinton' private server. A Trump victory could force the Fed to deviate away from its assumed December rate hike and a narrowing in the polls has weighed heavily on the Dollar. Having relinquished gains hard won throughout October the Greenback fell through 104 JPY to touch intraday lows at 103.83 while the Euro rallied through 1.10 and 1.1050 to touch session highs 1.1069. Attentions now turn to the FOMC and Federal Funds rate announcement as a critical marker ahead of next months presumed rate hike. Analysts will be seeking a clear and concise guide from the FOMC as expectations supporting a December rate adjustment wane in the face of wider political uncertainty. CME Fed Watch tool has 73% of analysts pricing in a rate hike down from 78% just last week.
0.7110 - 0.7200
The New Zealand Global Dairy Trade (GDT) recorded a strong increase of 11.4% in its latest auction with weakness in production putting short-term upward pressure on prices. While the figures were impressive, it had little impact on the NZD/USD as it may sway the Reserve Bank of New Zealand to cut interest rates again from records lows of 2% next week to help meet inflation targets. Speaking of interest rates, as expected by markets and economists the Reserve Bank of Australia kept interest rates at records low levels of 1.5% which prompted a drop in the NZD/AUD rate from levels around 0.94 to 0.9363 but have since recovered overnight. In other news, the BOJ decided a 7-2 majority vote of keeping interest rates at negative 0.10 percent to balances in current accounts held by financial institutions. NZD/USD currently changing hands at 0.7180, expect to see some volatility in the NZD/USD cross as top tier data scheduled today with the unemployment rate.
0.7530 - 0.7650
Supportive of a stronger Australian dollar yesterday the ASX managed to snap a three-day losing streak with the prices of iron ore and gold driving the commodities-back unit higher. Trading through the 76 US Cents handle there remains a cautious overtone to markets this morning ahead of what promises to be a very busy 24 hour window. Whilst the majority of market economists aren’t expecting any change to the RBA' underlying cash rate, today' meeting kicks starts a raft of tier 1 macro flows through to the end of this week, flows which include a manufacturing read from China ahead of the RBA this afternoon. Opening marginally stronger at a rate of 0.7608 when valued against its US Counterpart, topside resistance can be spotted at 0.7625 followed by 0.7680.
1.5950 - 1.6110
The markets were fairly quiet in the Asian session yesterday as the Great British Pound opened at 1.2175 before drifting to a low of 1.2147 in overnight trading. While the market continues to focus on the US Presidential elections and continued Brexit woes, the Cable bolted out of the gates to a high of 1.2250 with rampant speculation that Bank of England Governor Mark Carney may not serve his full term into 2021. Carney advised he will be staying on an extra year after his initial term comes to an end in 2018 and will stay until June 2019 to ensure he oversees a clear path into a new era, post Brexit negotiations. The all-important policy meeting this Thursday have been overshadowed as markets now price in a minimal chance of any interest rate movements this month. Attention turns to the release of UK Manufacturing PMI data this morning as the Sterling opens stronger across the board versus Greenback (1.2240), Aussie (1.6085), and the Kiwi (1.7120)
The fallout from FBI probes into Democratic Nominee Hilary Clinton continued to weigh on the U.S Dollar through trade on Monday forcing the Greenback lower against a raft of major currency counterparts. Investors’ concerns escalated as the most recent FBI investigations effect polling and suggest a considerable narrowing in the race for the White House. With Donald Trump closing the gap there is increasing concerns within financial sectors as to what a Republican victory would mean for domestic and international fiscal stability. The U.S dollar edged lower against the Euro, JPY and Swiss Franc as the dollar index was largely flat throughout Monday. With attentions squarely focused on any commentary affecting the Presidential race markets look to today' BoJ Monetary policy statement and Wednesday' FOMC rate announcement for direction ahead of next week' vote.
0.7080 - 0.7190
ANZ published its monthly business confidence survey yesterday which reported that businesses in New Zealand were less upbeat than they were in September, the report created an immediate sell-off putting pressure on the New Zealand Dollar intraday falling from 0.7164 down to 0.7135 vs the US Dollar. The drop was capped with a 15 pip range holding for the remainder of the day and throughout the European and US session with markets remaining cautious until the uncertainty goes away around the US election. High impact data releases today with both Japanese and Australian central banks due to announce their interest rate decision – both expected to hold. The Kiwi is slightly lower against the Australian Dollar at 0.9393 and unchanged against the Euro buying 0.6509.
0.7530 - 0.7630
The Australian Dollar failed to recoup losses suffered into the close on Friday struggling to break back above 0.76 U.S Cents. Having broken below supports at 0.7590 the AUD touched intraday lows at 0.7569 leaving the door open for a shift in bullish sentiment and a run towards 0.7530. The Aussie struggled to benefit from wider Greenback weakness as investors appear reluctant to extend gains ahead of this weeks all important RBA and FOMC policy meetings. The Australian dollar has laboured when trying to break beyond a 3 cent range and has bounced between 0.75 and 0.78 in 4 months since June, however with expectations surrounding a U.S rate hike continually increasing the AUD is vulnerable to externally driven bouts of volatility. Attentions today turn to the Fed' preferred inflation measure the PCE price index ahead of Tomorrow' RBA policy meeting and Wednesday FOMC rate review.
1.5920 - 1.6220
The Great British Pound continued to trade in a narrow band last week of 1.2114 – 1.2271 against the US Dollar as stronger than expected GDP figures showed the economy grew by 0.5% for the third quarter. Given a positive GDP figure this puts thoughts into a delay on further monetary policy easing at Thursday' interest rate meeting. Bank of England governor Mark Carney indicated last week that the “inflationary impact” of the currency slump “Could encourage him to vote against any further interest rate cuts”. The cable sitting at three-decade lows could test crucial support of 1.20 this week as analysts predict a downward spiral for the British economy into the end of 2016. The Pound looks for direction early this week with important Manufacturing figures on Tuesday and opens at 1.2175. Currently swapping hands against the Australian Dollar (1.6037) along with the New Zealand dollar (1.7023)
The U.S Dollar edged lower against a pool of major currency counterparts on Friday on suggestions the FBI would continue to review emails sent by Democratic Nominee Hilary Clinton. The report puts a dent in Clinton' campaign and creates wider uncertainty in the race for the Whitehouse. With Clinton seen as the steady choice for the Presidency the surge in support for Trump raises questions as to the stability of the domestic economy, international trade and foreign political relationships. Political uncertainly largely overshadowed a strong gain in third quarter GDP numbers and the Greenback tumbled against the Euro and JPY giving up recent gains as the 19 nation combined unit touched 1.0991 while the USD moved back through 104.50 JPY. With the Election now just a little over a week away attentions will be closely tuned to any commentary or rhetoric that may influence the electoral outcome. Attentions today turn to US Core PCE price Index, the Fed' preferred measure of inflation. A strong print would back Friday' GDP growth and lend markets to increase bets the FOMC and Federal Reserve will raise rates in December.
Friday was quiet on the data front with no local economic releases for the New Zealand Dollar to look towards for direction and therefore offshore events were the main focus. It was all over the news that the US Federal Bureau of Investigation would be re-opening the case of Hilary Clinton' use of her private email server, the Greenback took a hit on the back of this advancing the Kiwi from lows of 0.7108 touching a high of 0.7166. Currently changing hands at 0.9410 against the AUD and 0.6504 against the Euro. Focus this week will be labour market data due on Wednesday that will show whether any wage inflation is developing.
0.7505 - 0.7650
The Australian dollar moved lower through trade on Thursday testing key technical supports and touching intraday lows at 0.7582. The Aussie suffered at the hands of an appreciating Greenback as investors continue to increase expectations surrounding a December Federal Reserve interest rate hike. CME’s fed watch tool suggest 78.5% of analysts are pricing in a shift in Monetary Policy prompting a surge in demand for Treasury yields. The market is now looking to the Fed to raise rates and we may be seeing a shift in sentiment towards the AUD as cracks appear in its resilience. Yesterday’s drop below 0.7590 could signal the beginnings of a bearish turn however while the Aussie holds above 0.75 there is still scope for upside rallies. Attentions today turn to 3<sup>rd</sup> quarter U.S GDP numbers ahead of next week’s key RBA and FOMC policy meetings.
1.5950 - 1.6100
The Great British Pound once again dipped below the 1.2200 mark when valued against its US Counterpart yesterday despite a preliminary read of economic growth which managed to surprise market participants. Having earlier traded as high as 1.2271 the GBPUSD pair lost momentum following the release after GDP expanded by 0.5 percent during Q3 a number above the 0.3 percent gain which was forecast. Whilst appearing to have dodged any near-term economic damage in the aftermath of Britain’s decision to leave the European Union, markets will still be eager to digest next week’s policy decision by the Bank of England. Opening weaker versus the Greenback a rate of 1.2162 the Sterling is steady versus the Australian dollar (1.6022) whilst lower versus the New Zealand dollar (1.7077).
The US Dollar remained strong against most major currencies in the last 24 hour period as a mix of data from the US managed to provide support for the Greenback. EUR/USD was still hovering around the 1.0900 handle as US Durable goods orders fell for the month of September along with Core capital goods orders, on the whole the September report shows a modestly weaker than expected equipment investment by businesses in the USA. On a positive note, a report showing the number of Americans filing for unemployment claims fell by 3,000 to 258,000 which indicates continuing labour market strength as these numbers have been under the 300,000 mark for over a year now. Meanwhile, the Dollar was near three-month highs against the Yen touching 105.35, a wait and see approach if the pair can hold on to these gains as the spotlight will be on The Bank of Japan next week as the central banks holds a policy meeting.
0.7080 - 0.7160
Unable to keep pace with a stronger Greenback overnight the New Zealand dollar has fallen when valued against the worlds reserve currency. With yields on 10-year treasuries rising to as high as 1.87 percent, overall it has been a choppy session for global markets with earnings reports in the United States taking the steam out of any potential upside moves. Ahead of a US GDP print this evening, the New Zealand dollar remains on track to finish the week in familiar territory as it currently trades 0.3 percent below its Monday open. Marginally lower the New Zealand dollar currently buys 71.20 US Cents
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