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BY OFX

Aussie edges higher on Greenback profit taking


Australian Dollar

AUD / USD

Expected Range

0.7355 – 0.7520

The Australian Dollar moved higher during the first day of the trading week touching 0.7493 as investors continued to lock in profits from the Greenbacks recent rally. The local unit has been holding its own against the dollar thanks in part to a rise in prices of commodities such as iron ore, Australia' top export earner. Interesting times ahead for the pair as the US Federal Reserve are expected to raise interest rates next month, this in recent weeks has supported the Dollar along with expectations of increased fiscal spending and tax cuts under the Trump administration will spur economic growth. Meanwhile, AUD/EUR holding strong above 70c amid concerns over an upcoming referendum in Italy. On the data front, quiet again locally, the Aussie will look offshore at the US as it releases its revised data on third quarter GDP and Consumer Confidence report.

Great British Pound

GBP / AUD

Expected Range

1.6550 – 1.6850

Despite wider USD weakness and a general correction against recent greenback gains the Great British Pound edged lower through trade on Monday. Sterling followed the USD downward as investors sold down GBP holdings on comments from BoE policy makers Gertjan Vlieghe wherein he suggested the Bank would introduce prolonged stimulus measures. The MPC member is an advocate for a sustained period of looser monetary policy suggesting that by hiking rates to soon the Bank would leave the door open to a rapid rise in unemployment and a contraction in economic growth. Plunging through 1.24 and touching intraday lows at 1.2388 Sterling recovered some of the day' losses moving back through 1.24 and currently buys 1.2409 as attentions turn to Wednesday' banks stress test for domestic direction while U.S GDP numbers dominate early week direction.

Majors

USD, EUR, JPY

Expected Range

N/A

With the S&P 500 having notched up its seventh record close on Friday since the US Presidential election on Nov 8, US Stocks fell modestly on Monday as financial and consumer discretionary sectors lead the sell-off. As investors transition into the week, volumes and liquidity have remained muted in the aftermath of last week' holiday interpreted trading window with some key event risks on the horizon also helping to explain the calmer waters. Ahead of Friday' non-farm payrolls report which represents the last labour market snapshot scheduled before the Federal Reserve meets in December, attention is also rightly set to shift back to Europe with market participants now waiting on the Italian constitutional referendum on Sunday ahead of several speeches expected from ECB President Mario Draghi over the coming days. Opening marginally lower this morning the US dollar is softer versus the Japanese (112.101) whilst steady versus the Euro (1.0607).

New Zealand Dollar

NZD / USD

Expected Range

0.7030– 0.7110

The New Zealand Dollar advanced against the US Dollar on Monday having opened at 0.7038 to touch a high of 0.7102 overnight as overall Greenback weakness played amongst the FX markets. The Kiwi has been one of the strongest currencies over the past few days, surpassing even the U.S dollar and has been bought quite strongly however, still finding 71c a tough resistance to crack with interim support sitting at 0.7035. Data is light out of New Zealand this week, ANZ business confidence due tomorrow as well as the RBNZ' semi-annual Financial Stability Report.

BY OFX

USD upward assault stalls as bond yields falter


Australian Dollar

AUD / USD

Expected Range

0.7345 – 0.7520

Last week the Australian Dollar closed the week higher when valued against its US counterpart as investors took profits following Greenback strength in recent weeks. Having opened on Friday at 0.7408 following a quiet session the day prior due to the US Thanksgiving holiday, the Aussie remained above what has been seen to be a key resistance level of 74c throughout the trading day and opening this morning at 0.7449. However, the local unit will likely remain under pressure with the US Federal Reserve expected to raise rate next month. The FedWatch Tool is showing a 93.5% probability of an interest rate hike between 50-75 basis points. A quiet session expected locally with little to no economic data due, the European Central Bank President Mario Draghi is due to testify about the ECB' outlook and possible consequences of Brexit to the Economic Committee, AUD/EUR holding above 70c euro cents for now.

Great British Pound

GBP / AUD

Expected Range

1.6650 – 1.6850

The Great British Pound offered little through trade on Friday edging marginally higher touching 1.2480. Sterling held steady as 3<sup>rd</sup> quarter GDP estimates remained steadfast defying expectations the economy would struggle in a post Brexit environment. When combined with a marginal decline in U.S bond yields Cable ticked higher. The Pound has remained stubbornly stable in the face of recent USD gains and Sterling appears range bound struggling to break a 3 week cycle bouncing between 1.23 and 1.26. Attentions turn to this week' Bank Stress Tests for domestic direction while U.S bond yields and Greenback demand continue to govern wider directional flows.

Majors

USD, EUR, JPY

Expected Range

N/A

The U.S Dollars upward assault stalled on Friday as the worlds base currency moved marginally lower against most major counterparts. Limited volumes and thin trading in combination with a fall in U.S bond yields saw investors sell down USD holdings, taking profits and consolidating recent gains. The Greenback moved lower touching intraday lows at 112.72 against the Japanese Yen while the Euro advanced through 1.06 to touch session highs at 1.0611. The selloff has some investors questioning whether we have reached the peak in the US dollars&rsquo; recent upward push but the size of the pullback was small when considered against the scope of wider gains and there is still plenty of room for the USD to stretch its legs. Wider market sentiment suggests there is still an overwhelming demand to buy USD as fiscally driven growth and inflation lead monetary policy tightening are forcing bond yields higher and widening the gap between emerging market and established central bank' monetary policies. Attentions today will remain with yield prices and emerging markets central bank commentary ahead of Preliminary U.S GDP numbers Wednesday and Friday' Non-Farm Payroll report.

New Zealand Dollar

NZD / USD

Expected Range

0.6970 – 0.7050

The New Zealand dollar traded last week in a fairy tight range managing to keep its head above the 70.00 cent mark against the US Dollar. NZ Trade balance figures were better than expected as dairy products led to a rise in total exports for October. Despite hitting a low of 0.6980 the Kiwi remains resilient holding above critical support levels and opens at 0.7040 this morning. The Kiwi takes its cues from the RBNZ Financial Stability Report on Wednesday along with RBNZ Governor Graeme Wheeler appearing in parliament and could take the opportunity to discuss future monetary policy decision.

BY OFX

Market remains relatively unchanged despite global market sell off


Australian Dollar

AUD / USD

Expected Range

0.7360 – 0.7440

The Australian dollar has tracked a familiar course over the past 24 hours, remaining comfortably within the trading ranges witnessed for all of this week. With the 74 US Cents mark clearly representing a fresh level of resistance for the domestic unit, a US Public Holiday kept overseas investors at bay overnight as the Greenbacks upward trajectory finally showed signs of slowing. Having surged ahead versus a full spectrum of the world' top currencies the promise of higher yields from the world' largest economy continues to provide ample motivation for those investors pushing funds back into the United States. In what' likely to be a quiet end to the week the Australian dollar currently buys 74.07 US Cents.

Great British Pound

GBP / AUD

Expected Range

1.6700 – 1.6900

During Thursday' session the Great British Pound clawed back some gains on the USD. The GBP / USD cross traded to a high of 1.2494.With the US market closed for the Thanksgiving holiday all attention was on the BBA Mortgage Approvals which climbed to 40.9 thousand for the month of October, marking a five-month high. Attentions now turn to the Second Estimate GDP for direction and guidance. We expect support to hold on moves approaching 1.2351 while any upward push will likely meet resistance around 1.2479. The pair is currently trading at 1.2446.

Majors

USD, EUR, JPY

Expected Range

N/A

The U.S Dollar' rampant rally persisted through trade on Thursday as the worlds base currency continued to extend 14 year highs. With U.S markets closed in observance of Thanks giving liquidity and volumes remained thin yet the Greenback continued its upward push. Advancing through 113 JPY the USD touched intraday highs at 113.50 while the Euro struggled to break back above 1.0580. The proposed fiscally driven growth, tax concessions and benefits for repatriation of corporate dollars are driving expectations for an uptick in inflation, possibly forcing the Federal Reserve to pick up the pace of interest rate hikes and encouraging an inflow of capital as investors chase a higher yield. The extent of the dollars unrelenting surge is extending into emerging markets with central banks forced to consider interventionist methods less their currency markets collapse as bearish bets increase to their highest level in months. With volumes expected to remain thin through the end of the week and little of note on the macroeconomic docket attentions now turn to next week' GDP print and Non-Farm payroll numbers.

New Zealand Dollar

NZD / USD

Expected Range

0.6970 – 0.7050

A lack of economic data and illiquid markets due to the Thanksgiving holiday has seen the New Zealand dollar drift slightly lower in overnight trading. Starting the day yesterday at the 70.00 cent mark against its US counterpart, the Kiwi touched an overnight low of 0.6970 to test July 22<sup>nd</sup> lows this year. Further direction today will be driven locally by Trade Balance figures with forecasts of a narrowing deficit to occur. The Kiwi has bounced back this morning and is testing the 70.00 cent mark on open.

BY OFX

Economic sentiment post US election drives Greenback


Australian Dollar

AUD / USD

Expected Range

0.7350 – 0.7450

Grinding to a high of 0.7444 when valued against its US Counterpart on Wednesday the Australian dollar has remained in a relatively tight trade band over the past 24 hours. Despite strong support which has surprisingly flown from rising commodity and metal prices, a Greenback which has rallied to its highest level in more than a decade this week has well and truly contained any topside outbreaks for the domestic unit. With strong economic data combined with greater odds of a rate rise from the US Federal Reserve the Australian dollar remains at the mercy of underlying strength in the world' reserve currency. Opening fractionally lower at a rate of 0.7387 today' session is shaping up as a quiet one given the closure of US markets this evening.

Great British Pound

GBP / AUD

Expected Range

1.6600 – 1.6900

The Great British Pound opened higher against the Dollar as the UK Chancellor Philip Hammond delivered a spending boost targeted at improving the UK's chronic productivity deficit. The GBP/USD exchange rate traded to a high of 1.2468 as markets welcomed the announcement. However, the gains soon reversed amidst a widespread US Dollar surge buoyed by an uptick in durable and core durable goods economic data release. Further direction will be led by USD movements overnight along with Second Estimate GDP figures for the quarter on Friday evening.

Majors

USD, EUR, JPY

Expected Range

N/A

The U.S dollar advanced through trade on Wednesday testing fresh highs and touching its highest point in over 13 years when measured against a basket of major currency counterparts. Buoyed by an uptick in durable and core durable goods orders the Greenback rallied as investors increased bets the Federal Reserve will raise rates in December and again in 2017. While much of the market has priced in a rate hike when the Fed next meets on December 13 the multi rate hike view is becoming an important catalyst driving the world' base currency higher. A combination of improving macroeconomic indicators and expectations of fiscally driven growth under a Trump presidency are working to increase bets the FOMC and Federal reserve will raise rate again throughout 2017. Rallying through 112 JPY the USD touched near 8 month highs at 112.96 while the Euro fell through 1.06 to touch 19 month lows. With the US markets closed through trade on Thursday in observance of Thanks Giving holiday celebrations and limited liquidity available through trade on Friday we anticipate squaring of positions leading into next week' GDP and Non-Farm payroll numbers.

New Zealand Dollar

NZD / USD

Expected Range

0.6950 – 0.7050

The New Zealand Dollar reached a high of 70.80 cents in intraday movements yesterday. Better than expected durable goods orders for the month of October in the United States, along with an increase in consumer sentiment after Trumps election victory has once again driven the Greenback against the Kiwi, and the majority of major currencies. Erasing this week' gains the NZD/USD tested critical support levels once again at the 0.7000 mark and currently tests this level on open this morning. With little NZ economic data on the horizon, the New Zealand Dollar continues to be driven by sentiments in the United States leading up to the next US Federal Reserve meeting in December.

BY OFX

Markets steady ahead of raft of US data sets


Australian Dollar

AUD / USD

Expected Range

0.7350 - 0.7420

The Australian dollar has battled its way through the 74 US Cents mark when valued against its US Counterpart once again overnight. Whilst staying comfortably within its broader downside channel, sentiment flows were in most part positive during Tuesday' session as local share markets pushed back towards highs witnessed last in October. Assisted also by commodity prices which strengthened significantly, overall it has been a quite start to the week for the Australian dollar which has absorbed a substantial level of liquidity over the past fortnight. In the absence of any Tier 1 data flows today the domestic unit opens around 30 basis points higher at a rate of 0.7397.

Great British Pound

GBP / AUD

Expected Range

1.6700 - 1.6950

The Great British Pound comfortably broke through the 1.2500 mark overnight opening almost 1 percent higher in early trade. The Sterling reached an overnight high of 1.2512 against its US Counterpart on comments from Prime Minister Theresa May and a promise to address business concerns surrounding the domestic impact of British European exit. Sterling strengthened against 15 of its 16 major peers amid light trading, the biggest gain in seven sessions. However these gains were short-lived as liquidity remained thin and volatility forced investors to correct positions. Attentions now turn to Wednesday' budget release and expectations for a marginal increase in fiscal stimulus across infrastructure and housing

Majors

USD, EUR, JPY

Expected Range

N/A

The U.S Dollar edged higher through trade on Tuesday buoyed by a stronger than expected uptick in existing home sales. Having improved throughout September yesterday' strong read for October heightened hopes the Federal Reserve will raise rates in December and encouraged some investors to adjust their expectations surrounding the pace of additional rate increases throughout 2017. CME' Fed watch tool now shows 93.5% of analysis pricing in a rate adjustment before the end of the year while just on 50% anticipate supplementary interest rate hikes to come in June with rates approaching 2% by the end of 2018. The Greenback forced the Euro back below 1.06 to touch intraday lows at 1.0586 while a fall in the Japanese Yen drove the dollar index higher throughout the wider session. Gains were however capped as investors looked to safe havens in response to news of an earthquake and tsunami warning in northern Japan. The natural disaster heightened expectations of increased repatriations of JPY over the coming days and minimised Greenback gains. Attentions now turn to a raft of U.S data sets today with core durable goods orders and FOMC meeting minutes headlining the macroeconomic docket.

New Zealand Dollar

NZD / USD

Expected Range

0.7000 - 0.7110

The New Zealand dollar has consolidated its value up above the 70 US Cents mark over the past 24 hours, bouncing from an overnight low of 0.7031. In light of a US dollar which has risen sharply in the aftermath of Donald Trump' victory, expectations surrounding fiscal stimulus has continued to drive optimism that stronger growth and higher levels of inflation are on there for the world' largest economy. In a generally quiet session for the Kiwi which saw commodity linked currencies notch up marginal gains, the New Zealand dollar opens steady as it currently buys 70.54 US Cents.

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