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By Shameem Musa

Aussie testing fresh two-year highs


Australian Dollar

AUD / USD

Expected Range

0.7950 – 0.8090

The Australian dollar' upward trajectory continued through trade on Thursday edging through a point of key technical resistance and touching intraday highs at 0.8050. A decline in domestic retail sales and a smaller than anticipated trade balance print did little to dampen demand for the AUD as it remained steady throughout the Australasian session; making multiple attempts to extend beyond the 0.80 handle. The Aussie then found support and moved higher as investors looked to short USD holdings. The Greenback succumb to broader weakness as investors responded to the ECB' policy announcements and further amended expectations for a December rate hike following the resignation of Fed Vice President Stanley Fischer. As a bystander the AUD took advantage and touched 2 month highs and looks poised to break the peak enjoyed throughout the July uptick. Attentions now turn to RBA Governor Lowe for monetary policy commentary while Chinese inflation data and Canadian labour market conditions dominate the offshore docket.

Great British Pound

GBP / AUD

Expected Range

1.6160 – 1.6380

Majors

USD, EUR, JPY

Expected Range

N/A

The Euro hovered around the 1.19 level for most of the early Asian session before the ECB‘s president caused EUR/USD to rally. Defying warnings from Mario Draghi in his Press Conference that a stronger euro could have negative consequences the bulls pushed the EUR/USD through the 1.20 level to touch an eventual high of 1.2059. A higher dollar can lead to an increase in imports which ultimately can weigh on inflation, something the ECB is closely monitoring. With the ECB' current purchase program due to end in December, they have not yet decided how to proceed next year. Meanwhile in the U.S, initial jobless claims rose from 236k to 298k last week, this was the highest since 2015 and could have been impacted with Hurricane Harvey.

New Zealand Dollar

NZD / USD

Expected Range

0.7140 – 0.7280

The New Zealand dollar rallied strongly through trade on Thursday touching intraday highs at 0.7242 and regaining much of the losses suffered early in the week. After a lacklustre domestic session wherein supports at 0.7190 were again tested the Kiwi moved higher, benefiting from broadside USD weakness. Greenback softness in response to the ECB' policy announcement and the lingering impact of the BoC' surprise rate hike, when coupled with a declining expectation the Fed will tighten monetary policy conditions in December all forced investors to short USD holdings enabling further upside across its G-10 counterparts. Opening this morning at 0.7230 the NZD gave up more ground against the AUD breaking below 0.90 and touching 0.8980.

By Shameem Musa

Australian Dollar holds at the 80c level against the U.S Dollar


Australian Dollar

AUD / USD

Expected Range

0.7900 – 0.8060

The Australian dollar edged marginally lower throughout domestic trade yesterday following a second quarter GDP print that failed to incite continued upward momentum. Despite coming in squarely on general market expectations some investors had hoped for a stronger than anticipated print following a string of upbeat macroeconomic indicators, driven by improved construction output. Moving lower the AUD came off the psychological 0.80 handle and touched intraday lows at 0.7964 before support came from the Bank of Canada and a surprise upward adjustment in interest rates. The BoC' rate hike sparked renewed demand for higher yield assets and sent the USD lower allowing the AUD to again test and move through 0.80 cents. Profit taking remains on moves beyond this threshold with key technical resistance in tact on moves approaching 0.8030/40. Attentions now turn to monthly retail sale and trade balance data for direction throughout Thursday.

Great British Pound

GBP / AUD

Expected Range

1.6160 – 1.6380

Majors

USD, EUR, JPY

Expected Range

N/A

Despite a fall in German factory orders the EUR/USD remained close to and above the 1.19 handle when valued against its US counterpart. The data showed a decline of 0.7% missing a forecast rise of 0.3%, suggesting Europe' powerhouse could be running out of steam. Meanwhile in the US data showed that the service sector grew last month, the ISM non-manufacturing index rose from 53.9 in July to 55.3 in August. The Markit services PMI also told a similar story of stronger activity, revised downwards from 56.9 to 56.0 in the final estimate for August, but was still up from the 54.7 reading in July. In other news Bank of Canada surprised markets and lifted interest rates from 0.75% to 1.0%. The markets will be keeping a close eye on the ECB today which will be holding its monthly meeting. The ECB' current asset-purchase program terminates in December, and the bank will have to decide on a new scheme, the recent strength in the EUR/USD doesn’t help matters.

New Zealand Dollar

NZD / USD

Expected Range

0.7130 – 0.7260

Having performed strongly through trade on Tuesday investors seemingly appeared driven to unwind much of the gains through trade on Wednesday and the Kiwi was forced lower. Having touched early highs at 0.7262 the NZD slipped back below 0.72 but found support again on moves approaching 0.7190. This remains a key point of technical support, however, having already been broken the door is open to another downward drive. Attentions today turn offshore with no domestic data on hand to drive direction we will be watching ranges between 0.7130 and 0.7280.

By Shameem Musa

Australian Dollar pushes through 80c overnight against the Greenback


Australian Dollar

AUD / USD

Expected Range

0.7850 – 0.8060

The Australian dollar enjoyed strong gains through trade on Tuesday forcing its way through the psychological 0.80 handle and touching intraday highs at 0.8028. Investors broadly ignored the RBA' rate announcement and accompanying statement as monetary policy was left unchanged and little was offered in the form of forward guidance. Instead the AUD took its cues from offshore stimuli rallying against the USD as the world' base currency suffered its largest single day depreciation in more than 3 months. Investors driven by escalating tensions with North Korea fled to safe haven assets and high yielding emerging markets as risk appetite waned. Having broken through the 0.80 handle the door opens for broader upside gains and attentions turn to quarterly GDP data ahead of tomorrow' retail sales and trade balance prints as possible catalysts for a move higher and a test of new resistance levels at 0.8040 and 0.8080.

Great British Pound

GBP / AUD

Expected Range

1.6160 – 1.6380

Majors

USD, EUR, JPY

Expected Range

N/A

The EUR/USD was mostly flat in the Asian session hovering around the 1.19 level. Macroeconomic data released out of the Eurozone came in shy of expectations for Retail sales which fell 0.2% vs an expectation of 0.3%. Eurozone Services PMI slowed to 54.7, shy of the estimate of 54.9 points, the Euro moved to a low of 1.1868 following the data release however recouped all losses once the US markets opened and we saw the release of US factory orders declining in May which sparked concerns over the strength of the U.S manufacturing sector. The Euro touched an eventual high of 1.1941 and is currently changing hands at 1.1920 at the time of writing.

New Zealand Dollar

NZD / USD

Expected Range

0.7130 – 0.7300

The New Zealand dollar saw strong gains through trade on Tuesday and was the best performer among G10 currencies. Shrugging of tepid demand for risk the Kiwi surged back through resistance at 0.7190 and touched intraday highs at 0.7263. A steady uptick in Global Dairy Trade prices helped fuel a broader rally driven by USD weakness. The worlds base currency suffered its largest daily depreciation in over 3 months when valued against safe haven and high yield emerging assets as escalating concerns surrounding North Korea and commentary from key Fed officials cast doubts over a possible December rate hike. Holding firmly onto gains the Kiwi opens this morning buying 0.7241 U.S cents as attentions remain with global geopolitical tensions as the key driver of direction.

By Shameem Musa

Thin day of trade as North America closed for Labour Day


Australian Dollar

AUD / USD

Expected Range

0.7825 – 0.8000

The Australian dollar offered little through trade on Monday edging marginally lower as escalating geopolitical tensions drove investors to safe haven assets. North Korea' hydrogen bomb test and intelligence that suggests it is preparing to launch an intercontinental ballistic missile have sparked a strong response from global leaders with Trump issuing fresh sanctions not just against North Korea but their trading partners. The move saw investors looked to the JPY and CHF in haven plays yet did little to seriously undermine AUD strength. Speculative long positions are now at their highest level in four years ahead of a key domestic backdrop. Attentions turn today to the RBA and a monetary policy update from which we anticipate little activity. The RBA is expected to maintain its current policy stance with a hike not priced in until at least Q2 2018. As such direction will derive from any commentary that accompanies the statement however recent rhetoric suggests Governor Lowe will continue to offer a neutral bias with little price action expected in response. We will watch ranges between 0.7880 and 0.8000 through trade today.

Great British Pound

GBP / AUD

Expected Range

1.6160 – 1.6370

Majors

USD, EUR, JPY

Expected Range

N/A

As the United States observed Labour Day and the financial markets remains closed in North America it was mostly a quiet day for the EUR/USD which moved very little touching a high of 1.1922 and a low of 1.1878. On the release front, Eurozone Sentix Investor Confidence rose from 27.7 in August to 28.2 in September. The outcome for September remains close to a decade high. Eurozone PPI continues to improve, coming in flat for July, after falling in June by 0.2%. The fall in June is now bigger than originally reported. In the year to July, producer prices growth eased from 2.4% in June to 2.0% in July. In other news the USD/JPY moved lower to 109.38 on geopolitical tensions following a successful test of a hydrogen bomb by North Korea on Sunday, the news has prompted the U.S to warn of military response posing any threat to them or their allies.

New Zealand Dollar

NZD / USD

Expected Range

0.7130 – 0.7275

The New Zealand dollar edged marginally higher through trade on Monday creeping back above 0.7150 but struggling to mount a consolidated extension through resistance at 0.7180/90. With local trade dominate by waning risk appetite in the wake of North Korea' hydrogen bomb test the Kiwi struggled to make serious gains and appears placed to enter a lower trading band. With little of note on the domestic docket today geopolitical tensions will continue to drive direction ahead of tomorrow global dairy trade Index update.

By Shameem Musa

Australian Dollar has 80c in sight


Australian Dollar

AUD / USD

Expected Range

0.7825 – 0.8025

The Australian dollar rallied into the close on Friday buoyed by ongoing strength in commodity prices and underwhelming U.S labour market data. U.S non-farm payroll numbers printed well below expectations and saw the AUD test intraday highs nearing 0.80 U.S cents before investors reviewed the softer print in context. Historically August has been a poor month for strong employment growth and after a sustained period of labour market strength analysts doubted the read will do much to derail the Federal Reserve' path to normalisation. Moving lower into the close the Aussie finished the week buying 0.7975 and opens this morning at 0.7961. Attentions now turn to Tuesday' RBA rate announcements and Thursdays retail sales print for direction through the week ahead.

Great British Pound

GBP / AUD

Expected Range

1.6160 – 1.6380

Majors

USD, EUR, JPY

Expected Range

N/A

Despite a weaker-than-expected US nonfarm payrolls report the Euro struggled to mount any significant directional momentum through trade on Friday against the Greenback moving between a low of 1.1843 and a high of 1.1919. Data released showed that the U.S economy created 156,000 jobs in the month of August missing expectations of 180,000, the unemployment rate ticked up to 4.4% from 4.3%. A key piece of data the Federal Reserve monitors for evidence of continuing strength in the labour market is wages growth which for the year to August held at 2.5%. meanwhile in Japan, capital spending rose by 1.5% in Q2, well under consensus expectations for a rise of 7.9%, the small rise was despite a weaker yen and firmer overseas demand. The USD/JPY pair is currency changing hands at 109.80

New Zealand Dollar

NZD / USD

Expected Range

0.7100 – 0.7275

The New Zealand dollar failed to follow its commodity counterparts higher through trade on Friday struggling to take advantage of softness in U.S labour market data. Having slipped below technical supports at 0.7190 the Kiwi touched intraday lows at 0.7126 and looks set to test support at 0.71. With support now resistance at 0.7190 attentions turn to offshore data sets this week as the domestic macroeconomic docket remains relatively light on and the kiwi will be at the mercy of off shore directional drivers.

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