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AUD / USD
0.7305 – 0.7405
On the domestic front the Australian Dollar has fallen 5.9 percent since Donald Trump was elected as the next president of the United States. Since the November high of 0.7777 the AUD fell to a low of 0.7310 against the USD. The AUD has since recovered some of those losses and is currently changing hands at 0.7366. With little to no macro-economic data on hand this week the AUD will take its cue from offshore stimuli as markets position themselves ahead of Wednesday' Fed minutes and Thanks Giving long weekend. We expect support to hold on moves approaching 0.7305 while any upward push will likely meet resistance around 0.7440.
Great British Pound
GBP / AUD
1.6750 – 1.7150
The Great British Pound found support through trade on Monday advancing 175 points against the U.S dollar to touch intraday highs at 1.2509. With little domestic data on hand to drive direction Sterling found support in a weaker USD and a series of higher lows. Technical analysis suggest the GBP is poised for a possible run higher. In a market that has been largely USD positive the Pound has offered staunch resistance to downward pressures as markets respond to suggestions inflationary pressures are beginning to build forcing the Bank of England away from additional interest rate cuts and looser monetary policy. Attentions now turn to the MPC Autumn forecast statement for direction and guidance.
USD, EUR, JPY
The US dollar rally stalled through trade on Monday as investors looked to square positions, taking profits ahead of this week' extended Thanks Giving weekend. Having rallied across the last 10 sessions the USD advance appears to be running out of steam. Investors have largely priced in a Fed Rate rise in December while the support thrown behind the dollar following President Elect Trump' election victory wanes. The Euro moved back through 1.06 touching intraday highs at 1.0649 while the Greenback edged back below 110 JPY. Having rebounded from an 11 month low the Euro found support as concerns surrounding a nationalist push in next year' German and French elections eased. German Chancellor Angela Merkel announced on Sunday she would seek a fourth term, a move seen as widely Euro positive given Merkel' support for the Eurozone and liberal politics. With little of note on this week' macroeconomic dockets traders will likely continue to monitor ranges, adjusting positions ahead of next week' preliminary quarterly GDP print and Non–Farm payroll numbers.
New Zealand Dollar
NZD / USD
0.6945 – 0.7125
After a lacklustre day yesterday for the New Zealand Dollar we have had a weakening US Dollar drive the NZD/USD pair through the 0.70 barrier in overnight trading. Commodity currencies were all higher with the Kiwi reaching 0.7380 in the American session. Impacts of the recent South Island earthquake has had little effect on the NZD and will not see any major moves by the RBNZ and their monetary policy stance. The New Zealand dollar currently opens at 0.7060 against the Greenback, higher against the Australian Dollar 0.9588 (1.0430) and lower against the British Pound 0.5650 (1.77)
0.7250 - 0.7400
The Australian Dollar moved lower through trade on Friday having broken through key resistance levels on Thursday of 0.7480. The local unit suffered at the hands of an appreciating Greenback as growing expectations of a December rate hike continue to increase. The Aussie closed the New York session at a five-month low of 0.7319 and down nearly 3% for the week as the Federal Reserve Chair Janet Yellen said in testimony to Congress that an increase in interest rates could be “appropriate relatively soon”. The local unit has been range bound the past few months and now likely to succumb to further downward pressure over the coming weeks.
1.6660 - 1.6840
The UK currency closed the week down 2% when valued against is US counterpart despite hawkish comments of inflation heading up for the remainder of the year and into next year from the Bank of England Governor Mark Carney earlier in the week. The GBP/USD stands at risk of facing additional losses going into the end of the month amid growing expectations for a December Fed-rate hike. The Sterling opens weaker versus the Greenback at a rate of 1.2343. Meanwhile the Pound remains flat versus both the Australian dollar (1.6767) and the New Zealand dollar (1.7602).
The US Dollar Index which measures the Greenback strength against a trade-weighted basket of six currencies continued to hover around a 14-year high amid a rate hike by the Federal Reserve in just over two-weeks. Adding to the Greenback' recent strength has been a growing perception that the economic policies of the new U.S President-elect Donald Trump will help lift consumer prices. Across the Atlantic the Euro was down for a 10<sup>th</sup> consecutive session on Friday after the ECB Central Bank President Mario Draghi said on Friday that the Central Bank will continue to maintain stimulus until it was clear that euro inflation had picked up sustainably, inflation was just at 0.50% last month, some way from the ECB' target of around 2%. In other news, USD/JPY continues to strengthen having gained over 6% so far this month, the pair currently changing hands at 110.85. Markets will focus on today' Japanese Trade Balance data which is expected to increase on last month' numbers of 498B, a higher than expected reading should be bullish for the JPY.
0.6950 - 0.7110
Friday was quiet on the data front with no local economic releases for the New Zealand Dollar to take direction from and therefore offshore events were the main focus. The pair continued to weaken against the U.S Dollar as optimism around the strength of the U.S economy grew along with an expectation of a rate hike next month by the US Federal Reserve at its December 8<sup>th</sup> meeting. The kiwi moved within a 60 pip range for the session, hitting a high of 0.7060 and a low of 0.7006. Local data due out today with Credit Card Spending numbers however unlikely to affect the kiwi.
0.7340 – 0.7460
In figures released on Thursday the nation' unemployment rate remained steady at 5.6 percent during the month of October. Whilst Australia' workforce participation rate fell to its lowest level in a decade, 9,800 new jobs were created last month with a 0.9 percent rise in the total number of hours worked indicative of full-time employment growth. Having a neutralising impact on the AUD which has remained well and truly out of favour over the past five days, the local unit has managed to trade between a low of 0.7396 and a high 0.7500 when valued against its US Counterpart over the past 24 hours. Opening once again lower at a rate of 0.7413, data prints from the United States this evening are likely to garnish significant attention as the US dollar bulls prepare for another upward push.
1.6680 – 1.6720
Sustained strength in the world' reserve currency has eroded earlier gains for the Great British Pound which tracked as high as 1.2504 versus the Greenback overnight. Assisted early by a strong retail sales number for the month of October which revealed its strongest growth rate since April of 2002, underlying sales increased by 1.9 percent, a number which comfortably exceeded the forecast gain of 0.5 percent. Hamstrung by a US dollar which has swept up everything in its path, the Sterling opens weaker versus the Greenback at a rate of 1.2419. Meanwhile versus both the Australian dollar (1.6756) and the New Zealand dollar (1.7652) the Sterling opens in a more commanding position.
In a busy session of macro-economic flows from the United States, Housing Starts and Building Permit numbers both surpassed expectations for the month of October whilst the all-important Consumer Price Index increased by a seasonally adjusted 0.4 percent. Holding close to its highest level in five months versus the Yen before Japan' Prime Minister Shinzo Abe meets with President – elect Donald Trump in New York, the US Dollar Index which tracks the US currency versus 10 of its major peers remained close also to the record highs witnessed on Wednesday. Pushing global stocks higher and Treasuries lower, US Federal Reserve Chair Janet Yellen confirmed overnight that an interest rate hike would be coming relatively soon, a view which, along with the perceived fiscal assistance from Trump helps explains the Greenback substantial rally, it has surged by 2.8 percent this week alone. Ahead of further rhetoric from Janet Yellen this evening, ECB President Mario Draghi is also due to speak at the 26th European Banking Congress in Frankfurt. .
0.6980 – 0.7100
With technical resistance levels kicking in for the US Dollar intraday yesterday, the New Zealand dollar bounced from the lows witnessed overnight on Wednesday, managing instead to push back towards the 71 US Cents handle. Proving to be an early and unsustainable push higher, bets of an interest rate rise from the US Federal Reserve next month have cemented the Greenbacks dominance with Janet Yellen overnight doing very little to water down expectations that rise in borrowing costs will be delivered in December. Following another a session of US dollar strength, the Kiwi opens in a vulnerable position this morning as it currently buys 70.35 US Cents.
0.7380 – 0.7630
The Australian dollar has seen downward pressure overnight as commodity prices weakened and the US Dollar index hit 14 year highs overnight. The market continues to buy US dollars on higher US Yields and pricing is now a 90% chance of the US Federal Reserve increasing their interest rates by 0.25% at the December 15th Meeting. Traders will look to Federal Reserve Chairwoman Janet Yellen' testimony this evening to see if there is any rhetoric around December rate increases and the Trump effect of proposed economic policies. From an intraday high of 0.7570 the Australian dollar broke through critical support levels to touch overnight lows 0.7460. Direction of the Aussie now hinges on Unemployment figures this morning where it is expected to increase to 5.7%. This evening an array of American data is released to the market including inflation figures, the Phil Fed Manufacturing index and unemployment claims. The Australian dollar opens this morning at 0.7475.
1.6425 – 1.6825
The Great British Pound edged marginally lower through trade on Wednesday slipping back below 1.2450 as investors continue to chase increasing USD yield and denominated assets. Having steadied on better than expected unemployment numbers Sterling appears to be struggling to break outside near term ranges between 1.2360 and 1.2680. Having maintained a relatively tight trading band throughout November thus far investors are seeking a catalyst that will push the Sterling through or below key support and resistance levels. Today' UK retail sales reports may prompt activity with a strong read forcing the BoE and MPC to rethink its current easing platform. Private sector consumption remains a key driver of growth in the UK and the Bank is compiling and comparing macroeconomic indicators in determining which way to push future monetary policy.
The U.S Dollar rally continued through trade on Wednesday as the momentum following Trump' election win continues to push U.S treasury yields higher and drive investors towards U.S denominated assets. Having touched 14 year highs the dollar index' upward trajectory stalled as markets looked to square positions and take profits ahead of a series of key data macroeconomic data sets and Fed commentary. While the Yen remained relative stable throughout much of the session the Euro tumbled through 1.07 to intraday lows at 1.0667. Fears the tide of nationalist politics could move east across Europe, coupled with a burgeoning gap in expected central bank monetary policy platforms have forced the shared currency lower as analysts bet the Fed will raise rate in December and at a faster pace through 2017. The Greenbacks remarkable rally does not come without concerns however. The speed of the upward push suggests the moves may be overdone and increases in implied volatility leaves the door open for a reversal and downward correction. Attentions today turn to CPI inflation, manufacturing data and unemployment claims as key macroeconomic markers of economic strength while Fed chair Janet Yellen testifies before congress. Any suggestion from Yellen that the dollar rally is weighing on the minds of FOMC board members may be enough to douse the red hot USD.
0.7000 – 0.7140
The New Zealand Dollar has been one of the worse preforming currencies against the Greenback in the past seven days, having touched a high of 74c last week to fall to a low of 0.7032 last night, a 5% move lower. Despite US Producer Prices coming if short of expectations and US Industrial Production flat for the month of October the US Dollar remained strong supported by rate hike expectations next month. The US dollar Index rose to a 14 year high as investors have fully priced in a hike for the next Federal Reserve meeting in December. The Kiwi remains under pressure as investors focus on offshore data due today with US inflation and unemployment claims.
0.7530 - 0.7630
The Australian dollar has remained relatively unchanged from yesterday' market open as the Reserve Bank of Australia released its Monetary Policy meeting minutes for November. As expected the RBA is shifting to a more neutral guidance as they become more optimistic on the domestic economy. Previous interest rate cuts this year have assisted inflation in returning to targeted levels. On release of the minutes the Australian dollar rallied to an intraday high of 0.7580. Retail sales and the Empire State manufacturing index both strengthened in the United States for the month of October providing the catalyst for the dollar to rally and the AUD/USD cross to reach a low of 0.7510 overnight. A bout of profit taking on USD longs has seen the Aussie bounce back to open this morning at 0.7560.
1.6400 - 1.6600
A wild night on the Sterling cross as attentions turned back to Brexit discussions. A leaked memo to the times and seen by BBC has warned that the government has no actual exit strategy of leaving the European Union and up to 30,000 civil servants will be required to fulfil Brexit-related projects. The British Pound was also sold off in droves from intraday highs of 1.25 to a low of 1.2380 as CPI figures were released to the market where an annualised reading of 0.9% was down from September' reading of 1%. The Great British Pound has recovered slightly to open this morning at 1.2450 against the US dollar and is also trading at 1.6460 against the Australian Dollar and 1.7530 against the Kiwi.
A stronger than expected improvement in retail sales across the world' largest economy throughout October helped push the recent U.S Dollar rally toward 11 month highs through trade on Tuesday. Profit taking and an aggressive sell off of bonds had ensured the recent demand for treasury yields slowed halting the Greenbacks upward charge. The uptick in consumer spending however bolstered yields and reinforced expectations the Fed will raise rates next month. The dollar moved through 5 month highs against the Japanese Yen touching intraday highs at 109.34 while the Euro fell through 1.0750 for the first time since January. As demand for yields remains in intact and investors continue to price in changing Monetary Policy expectations there is scope for further USD gains through the short and medium term. It is however important to note that increases in implied volatility across key currency pares (USD/JPY and EUR/USD) suggest uncertainty remains heavy in the minds of investors. Traders and markets are still unsure of whether President Elect Donald Trump can deliver the aggressive fiscal stimulus promised throughout his campaign and analysts are wary of a sudden USD reversal should sentiment shift or the USD enter overbought territories. Attentions today turn to Producer Price indexes as a marker of consumer inflation and possible catalyst driving tighter monetary policy.
0.7050 - 0.71500
The New Zealand dollar edged lower throughout trade on Tuesday nearing one month lows and touching 0.7071 overnight. Despite improved dairy prices the Kiwi fell as stronger than expected U.S retail sales bolstered demand for the world' base currency. Increasing expectations the Fed will raise interest rates in December amid a rapid surge in demand for U.S Treasuries has forced a remarkable NZD sell off. Having lost over two and a half cents in the week since the U.S Presidential election the Kiwi sits poised on a point of key technical support. A move below 0.7055 could trigger further selling pressures and a deeper downward correction through 0.70. Attentions today turn offshore for direction ahead of key domestic retails sales numbers Thursday.
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