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BY OFX

Clinton cleared by FBI; risk appetite rally on open


Australian Dollar

AUD / USD

Expected Range

0.7630 - 0.7730

The Australian Dollar traded sideways during Friday' local session after the Monetary Policy statement from the Reserve Bank of Australia said it is focused on the medium-term inflation target and sustainable growth in judging the cash rate stance at its November meeting. It suggests the RBA will not be looking to lower the official cash rate anytime soon. Also, Retail Sales jumped 0.6% easily beating forecast of 0.4%. In the overnight session, the release of US non-farm payrolls report came in slightly below expectations, however an improvement in average hourly earnings suggest wage growth could help a consumer driven inflationary push reinforcing calls for a rate hike in December. The AUD/USD tested 0.7690 but failed to break through. According to CME' Fed watch Tool there is a 66% probability there will be a hike in December. ANZ Job Ads this morning, however all attention will be on the US presidential election which kicks off tomorrow.

Great British Pound

GBP / AUD

Expected Range

1.6125 - 1.6325

The Great British Pound finished the week higher against the Greenback on the back of the ongoing “Brexit” negotiations. Sterling reached highs of 1.2527 against the USD late last week after a British High Court sent a shock through UK markets as it ruled UK Prime Minister Theresa May must seek parliamentary approval to formally begin the process of taking the country out of the EU. The move throws the government' plans into disarray as the PM had previously said she would shortly invoke Article 50. The Government have appealed the decision and the Supreme Court is due to sit in December. Attentions now turn to a heavily laden week ahead with all eyes on the US election and any breaking news on Brexit. Sterling opens lower this morning and currently buys 1.2448 on news Clinton has been cleared by the FBI lifting the shroud that hung over her candidacy through the last week and a half.

Majors

USD, EUR, JPY

Expected Range

N/A

The U.S dollar remained under pressure through trade on Friday as investors seek the safety of haven assets driving demand for the Swiss Franc and Japanese Yen. The Greenback touched near one month lows against the haven currencies as markets remain jittery ahead of Tuesdays U. S Presidential election. Analysts largely overlooked an uptick in wages and stable employment growth as markers supporting a December rate hike with attentions squarely focused on America' decision. The battle remains too close to call as several crucial electorates previously expected to be safe wins for Clinton are now poised on a knifes edge with Trump' aggressive campaign turning up the heat in the final days before voters hit the polling booths. With little macroeconomic data on hand to drive investors through Monday direction will be solely governed by expectations surrounding the election result. To that end we have seen a sharp rally away from haven assets at time of writing as confirmation the FBI has again cleared Clinton of any wrong doing lifting the cloud that has plagued her candidacy this last week and a half. We expect markets will continue to square positions leading into the vote as traders appear reluctant to extend bets ahead of this crucial risk event.

New Zealand Dollar

NZD / USD

Expected Range

0.7220 - 0.7365

The New Zealand dollar offered little to excite investors through trade on Friday holding onto gains enjoyed throughout the week and refusing to dip back below the 0.73 U.S Cent handle. Having rallied strongly on the back of improved labour market conditions the Kiwi benefited from heightened investor nervousness in the face of a tight Presidential race. Markets remain reluctant in holding on to USD long bets as the possibility of a Trump victory on Tuesday remains so squarely on the table. Having touched intraday lows at 0.7310 Friday the NZD opens the week buying 0.7307 as traders attentions are drawn to any news that will affect the outcome of Tuesday' Presidential Election.

BY OFX

U.S election jitters continue to dominate sentiment.


Australian Dollar

AUD / USD

Expected Range

0.7580 - 0.7740

The Australian dollar edged higher throughout Thursday buoyed by an improved trade balance and wider USD weakness. The AUD rallied in early trade following a narrowing in the trade balance deficit touching 0.7680 before a squaring of USD positions following new polling that suggested democratic candidate Clinton regained a small lead forced a step sell off and sent the AUD toward intraday lows at 0.7640. The Aussie recouped losses as wider uncertainty and general market unease capped USD gains and the AUD touched intraday day highs at 0.7687. Having again met resistance on moves approaching 0.7690 /0.77 attentions now turn to the RBA' monetary policy statement and domestic retails sales numbers as markers for direction leading into U.S labour market data and next week' Presidential Election.

Great British Pound

GBP / AUD

Expected Range

1.6050 - 1.6350

It has been a busy evening for the British Pound posting four week highs of 1.2495 overnight against its US Dollar counterpart. As anticipated the Bank of England left interest rates on hold at 0.25%. BOE now moves to a neutral stance with no further cuts expected in the near future. The Sterling started its rally against the US Dollar as the monetary policy committee revised their inflationary figures to 2.7% into 2017 and 2018 with the National Institution of economic and social research predicting this number could reach as high as 4% till 2021. Further fuel to the fire was the High court ruling meaning the government is unable to trigger article 50 of the Lisbon Treaty without Parliamentary consent. This caused a sharp 2% rally against the Euro to 1.1285 with hopes of a soft Brexit now slowly evaporating. The Great British Pound opens stronger against the board, currently trading at 1.2460 against the Greenback, the Australian dollar (1.6210) and Kiwi (1.6980)

Majors

USD, EUR, JPY

Expected Range

N/A

The U.S Dollar remained subject to selling pressures throughout trade on Thursday as nervous investors waver in the face of election uncertainty. Having stabilised in early trade following polling that suggested Democratic Candidate Hilary Clinton was regaining her overall advantage the dollar failed to rebound beyond three week lows as markets prepare for the possibility of a Trump Presidency. The Greenback fell through 103 JPY to touch intraday lows at 102.58 while the Euro pared early losses holding onto the week' early advance through 1.11. There is certainly a shift in market sentiment forming as investors pile into haven assets or sit out altogether, wary of extending positions ahead of next week' critical risk event. Attentions today will remain heavily focused on last minute polling numbers as the race for the White House overshadows headline macroeconomic data sets. U.S non-farm payroll and labour market data will govern direction, however anything remotely near market estimates will likely have little impact ahead of the election next week.

New Zealand Dollar

NZD / USD

Expected Range

0.7220 - 0.7360

The New Zealand Dollar has posted a near 3% gain vs the US Dollar this week mostly assisted by a weaker Greenback. Local data yesterday showed that the ANZ Commodity Price Index rose 0.7% in October which was its sixth straight monthly increase however with U.S election jitters dominating sentiment there was little to non-impact on the pair intraday. As the US session kicked off, US weekly unemployment claims rose 265k from a reading of 258k prior which pushed the Kiwi through technical resistance levels of 0.7300, if the USD remains weak we see no reason for the pair not to continue to rise.

BY OFX

US Presidential Race dominates sentiment


Australian Dollar

AUD / USD

Expected Range

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

Expected Range

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).

Majors

USD, EUR, JPY

Expected Range

N/A

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

Expected Range

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

BY OFX

Aussie dollar ticks higher as RBA nears period of neutral monetary policy


Australian Dollar

AUD / USD

Expected Range

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.

Great British Pound

GBP / AUD

Expected Range

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.

Majors

USD, EUR, JPY

Expected Range

N/A

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.

New Zealand Dollar

NZD / USD

Expected Range

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.

BY OFX

Central Banks in focus; Eyes on RBA, BoJ and FOMC


Australian Dollar

AUD / USD

Expected Range

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.

Great British Pound

GBP / AUD

Expected Range

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)

Majors

USD, EUR, JPY

Expected Range

N/A

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.

New Zealand Dollar

NZD / USD

Expected Range

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.

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