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AUD / USD
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.
Great British Pound
GBP / AUD
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).
USD, EUR, JPY
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.
New Zealand Dollar
NZD / USD
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
0.7530 - 0.7710
The Australian dollar enjoyed mixed fortunes throughout the global session on Wednesday enjoying strong gains domestically before suffering a downward correction throughout early European trade. The AUD was bolstered by a stronger than anticipated third quarter CPI inflation print rallying through 0.77 to touch intraday highs at 0.7708. The strong read came on the back of increases in the price of fruits and vegetables as adverse weather conditions disrupted supply chains. While we anticipate the RBA will now leave rates on hold next week the temporary catalyst to higher prices could force the board to adopt a somewhat more dovish tone than would have been expected if price gains had been driven by wider economic strength. The Aussie relinquished all gains enjoyed throughout the domestic session moving back through 0.7650 to touch intraday lows at 0.7638. Attentions now turn to U.S GDP growth Friday ahead of key Central Bank announcements as both the RBA and Federal Reserve set to proffer monetary policy statements throughout next week. With the Australian dollar range bound and struggling to break outside a 0.7590 – 0.7730 bracket analysts will be keenly attuned to any signal that suggest a breakout and move away from this current bullish trend line is looming.
1.5930 - 1.6070
The Great British Pound has found some upside when valued against its US Counterpart over the past 24 hours, trading as high as 1.2249 versus the Greenback. Whilst the intraday bias remains somewhat neutral, it has been a period of consolidation for the Sterling this week with the broader picture still remaining weak ahead of key resistance levels which have been earmarked closer to the 1.2450 mark. In the absence of any domestic flows overnight investors have already started to gear towards this evening’s preliminary GDP release where it’s expected Britain’s economy had expanded by 0.3 percent during the third quarter of this year. Notching up some solid gains across the board the Sterling is higher versus Greenback (1.2243), the Aussie (1.6002) and the Kiwi (1.7109).
The US Dollar fell against a basket of currencies on Wednesday as uncertainty around the U.S presidential election in the coming weeks and the Federal Reserve raising interest rates in December have resurfaced. The Euro Dollar rallied above 1.09 touching a high of 1.0945 offshore aided by a stronger German October IFO business climate indicator which in summary showed a positive picture of the German economy in the beginning of Q4 16. The Japanese Yen was mostly unchanged against the Greenback and the pair trades just above 104.50 handle. Key releases today US Core Durable Goods Orders which are expected to increase by 0.2% and US Unemployment claims expected to increase slightly.
0.7080 - 0.7200
The New Zealand dollar fell against the Australian Dollar in early trade following the release of Australia’s third quarter consumer price index report. While the headline consumer price index rose 0.7 per cent last quarter, beating market expectations of a 0.5 per cent rate, the New Zealand Dollar recouped early losses after closer analysis showed price pressures were driven by a temporary uptick in fruit and vegetable prices. All eyes today will be on the release of the Trade Balance data with expectations the deficit will reduce from -2.265M to -1.125M. The New Zealand Dollar was little changed against the Greenback throughout trade Wednesday struggling to break outside a 40-point trading bracket and currently changes hands at 0.7151.
0.7530 - 0.7690
The Australian dollar edged higher through trade on Tuesday bouncing off supports at 0.7590 as investors adjusted USD holdings on shifting European stimulus expectations. The Aussie benefitted as the Greenback moved off 8 month highs after Bank of England Governor Mark Carney doused suggestions the BoE would lend itself to further easing so soon after its previous rate cut. The comments dampened expectations for an extension in ECB quantitative easing and narrows the perceived gap forming between U.S and European Central Bank monetary policy platforms. The AUD rallied to touch intraday highs at 0.7655 however investors weren’t prepared to extend gains ahead of today’s all important 3<sup style="font-weight: lighter;">rd</sup> quarter CPI print. Today’s read has proved a sticky point for currency analyst through the week thus far as a strong read could bolster the near term AUD/USD fortunes, diminishing demand for additional RBA rate cuts and all but guaranteeing interest rate stability through the end of the year. With the Aussie poised to break outside recent ranges we watch support and resistance at 0.7590 and 0.7760 as markers signalling a possible directional swing.
1.5850 - 1.6000
The US Dollar rallied against the Sterling overnight as comments from Bank of England Governor Mark Carney that the recent movements by the Pound would be considered at its next rate setting due to be held on Thursday 3 November. The comments were viewed by the market that interest rates will remain on hold for the foreseeable barring any catastrophic in the markets. The Pound dipped by the 1.22 marked and has remain below this handle for last 12 hours. Tomorrows release of preliminary GDP should also see some volatility in the next day or so. Against the AUD the pound is changing hands at 1.5949 and 1.7015 against the New Zealand Dollar.
Continuing expectations that the US Federal Reserve will raise interest rates in the coming months has advanced the US Dollar against most major currencies, Dollar/Yen hit a high of 104.88, the highest we have seen since the end-of-July. On Monday, Chicago Fed President Charles Evans said the Fed could raise rates three times between now and the end of the year as long as the inflation outlook and labour market remain on track. A move does seems unlikely ahead of the US presidential election with investors pricing in a 71% chance of a hike in December. The Euro remained on the back foot with little reaction to data showing German business confidence hit a two-year high, it seems that any initial concerns over the UK’s decision to the leave the European Union are fading even more. The Euro fell to a low of 1.0852 but managed to recoup all losses to closing a shade under 1.09. Focus now turns today to key data releases starting with Australia’s CPI followed by German Import Prices.
In yesterday’s day of trading, the New Zealand Dollar traded lower against the Australian Dollar on the back of higher iron ore prices which bolstered demand for the Aussie ahead of Australian inflation data today. The NZD/AUD slipped to a 24-hour low of 0.9344 from 0.9381 yesterday, extending its decline for a third day. The Greenback was initially stronger against the New Zealand Dollar in early trade but gave back most of those gains. As a result, the Kiwi was little changed, currently trading at 0.7162 US cents from 0.7148 cents yesterday.
0.7530 - 0.7680
The Australian dollar struggled to mount any significant directional momentum through trade on Monday bouncing off supports at 0.7590/0.7600 and shrugging aside wider USD gains. While the Greenback neared nine month highs against a basket of major currency counterparts the AUD held off deeper downward corrections on expectations Philip Lowe and the RBA will look to maintain the current policy platform through both its November and December meetings. With little of note on docket today attentions remain squarely focused on Wednesday’s 3<sup>rd</sup> quarter CPI inflation report. A print outside an annualised expansion of 1.1% could shift the near term AUD outlook and force a break below 0.76 and test of supports approaching 0.7530.
1.5950 - 1.6110
The Pound remained above the 1.22 handle against the Greenback overnight with the pair trading between 1.2200 and 1.2240. Negotiations between the UK and the European Union as well as negotiations between England, Scotland, Northern Ireland and Wales around the timing and what is required in exiting the EU after Junes Brexit vote still are weighing on any upside that the Pound has versus the US Dollar. Today’s speech by Bank of England Mark Carney will also shed some light on a possible EU exit and what impact it would have for future growth. Against the Australian Dollar, the Pound is changing hands at 1.6040 and 1.7120 against the New Zealand Dollar.
The Dollar remained at eight-month highs against the Euro during Monday’s day of trading as expectations for a U.S interest rate hike before the year end boosted demand for the Greenback. Adding to this are growing expectations of Hilary Clinton winning the upcoming U.S presidential election which aids support to a December rate hike by the Federal Reserve. The pair moved within a tight range of 1.0857 to 1.0900. Economic data releases for both German and French Manufacturing PMI exceeded expectations however, the Euro remained under pressure since the ECB president Draghi indicated last week the ECB may extend its stimulus program in December. Japan’s Trade Balance moved back into positive territory recording a surplus of 498.3 billion yen, this move was helped by an improvement in exports although it was still the 12<sup>th</sup> consecutive month that an annual decline has been reported which has come off the back of a rising USD/JPY. Markets will turn their attention to this evening speech by ECB President Draghi who is due to speak about Economic and Monetary affairs.
0.7040 - 0.7230
With domestic markets closed in observance of the Labour Day Bank Holiday there was little directional guidance on hand throughout local trade on Monday, leaving the Kiwi at the mercy offshore stimulus. Having broken through a key resistance level of 0.7140 the Kiwi touched overnight highs at 0.7176. The gains however were short-lived as the Greenback strengthened against commodity currencies and the Kiwi retreated, bracing itself marginally above support at 0.7120. The Kiwi is currently changing hands against the Greenback 0.7137 as attentions turn to third-quarter US GDP data Thursday.
0.7530 - 0.7650
Having broken through 0.77 and touched two month highs in early trade last week the Australian dollar suffered a heavy sell off through trade on Friday as investors drove the U.S dollar higher. The Greenback’s dollar index rallied to its highest level in 10 months as traders followed heightened expectations of a Federal Reserve interest rate hike in December, forcing the AUD to intraday lows at 0.7589. The Aussie dollar has struggled to break beyond lows of 0.7460 and highs of 0.77 in the four months since the end of June and last week’s rally looked to signal a possible breakout., however the rapid retreat appears to have closed the door on any short term upward push with ranges expected to be choppy into the U.S Presidential election. Attentions this week turn to Wednesday’s CPI inflation print as a key marker for future RBA monetary policy and a possible trigger point for additional interest rate adjustments.
The Pound fell in Friday’s trading as Brexit fears again griped the markets and just how the UK government will go about activating Article 52 of the Lisbon Treaty next year. With Prime Minister Theresa May in Brussels for her first EU meeting, the steps of the exit still remain unclear. The Pound traded between 1.2180 and 1.2240 against the US Dollar. In what shapes up to be a be a big week for the Sterling the 2 keys events that the markets will focus on will Bank of England’s Governor Mark Carneys speck on Wednesday and Thursday’s preliminary GDP for the past quarter. Against the Australian and New Zealand Dollar the Pound is changing hands at 1.6050 and 1.7040 respectively.
The US Dollar continued its recent run of strength advancing against a basket of major currency counterparts as investors responded to heightened expectation surrounding a December interest rate tightening by the Federal Reserve. CME’s Fed watch tool now shows approx. 70% of analysists pricing in a rate hike before end of 2016. The Euro struggled as a general lack of commitment from the ECB regarding an extension of the QE past March 2017 kept a lid on the EUR/USD, the pair hit a low of 1.0857 on Friday night - a level not seen since early March. USD/JPY recorded small losses last week closing at 103.70, with little domestic Japanese data available last week to stimulate any significant directional move. Attentions now turn to a raft of top tier macroeconomic indicators through the week ahead kick started by today’s Japanese Trade Balance report and bookend by US third quarter GDP.
0.7050 - 0.7250
We kick off this week with a Public Holiday, Labour Day. A relatively quiet week ahead with the only data release set for Thursday’s Trade Balance. On Friday we saw a tight trading range against the USD between 0.7143 – 0.7194. The Kiwi is currently trading at 0.7158 and we expect the NZD to continue to trade in that range again today. The Kiwi remains strong against the British Pound after its post-Brexit devaluation. The Kiwi is currently changing hands 1.7058 (0.5862) against the Pound.
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