Aussie holds onto gains as optimism and risk demand improved

OFX Daily Market News

Posted by OFX

AUD – Australian Dollar

The Australian dollar held onto Tuesday’s gains edging marginally higher through trade on Wednesday as risk sentiment improved and the currency enjoyed some overflow from the NZD uptick following the RBNZ policy announcement. The coronavirus’ rate of proliferation has slowed through recent days fostering increased confidence across markets that the economic impact will be short lived. Having touched 0.6740 the AUD opens marginally lower at 0.6735 as attentions now turn to commentary from RBA governor Lowe and key US inflation and consumer spending data. Watch resistance on moves approaching 0.6750 with supports intact on moves toward 0.6680.

Key Movers

The Euro downturn continued through trade on Wednesday slipping below 1.09 again and touching 1.0877, its lowest level in 3 years. Broader Euro area industrial production slumped through December following misses in Germany and Italy earlier in the week and adding to a host of poor data sets through recent months. The string of lacklustre macroeconomic indicators, when compared with strength across key US data sets has helped foster a carry trade run on the single currency as investors short the combined unit in a race to chase a higher yield return. With calls for further policy easing gaining momentum we expect the Euro will remain under pressure through the medium term.

Safe haven’s fell as risk sentiment continued to improve as fears of a sustained economic downturn on the back of the coronavirus eased through trade on Wednesday. The JPY and the CHF were the days big losers, with the USD/JPY pushing back above 110.

Attentions remain squarely affixed to coronavirus headlines as the primary driver of risk demand while US CPI inflation data and domestic retail sales numbers headline the macroeconomic docket into the weekly close.

Expected Ranges

AUD/USD: 0.6680 – 0.6780 ▲

AUD/EUR: 0.6130 – 0.6230 ▲

GBP/AUD: 1.9080 – 1.9405 ▼

AUD/NZD: 1.0380 – 1.0520 ▼

AUD/CAD: 0.8880 – 0.8960 ▲


Posted by OFX

The Greenback Gives Up Gains As Safe-Haven Asset Underperform

OFX Daily Market News

Posted by OFX

USD – United States Dollar

Fed Chairman, Jerome Powell gave the first of two days of testimony before lawmakers in Washington yesterday, providing a relatively upbeat assessment of the U.S. economy. Powell said the Federal Reserve is also “closely monitoring” the deadly outbreak of the Coronavirus, which has now been officially named by the World Health Organization as COVID-19. Powell went on to say the virus has “lead to disruptions in China that spill over to the rest of the global economy,” he stopped short of saying the outbreak had changed the Fed’s outlook for the U.S. economy for the next few quarters. The overall expectation among many members of the FOMC is that rates will remain on hold through 2020.

The U.S. dollar edged lower through trade on Tuesday and into Wednesday morning, edging off four-month highs as risk appetite improved and demand for haven assets abated. With volatility across currency markets largely non-existence as of late, the greenback remains mostly well supported, and we expect the broader bullish narrative to continue, especially as investors look to short the Euro in a carry play to foster a higher yield return. The Euro fell through 1.09 touching 1.0870 before the shift in risk sentiment helped foster a small bounce into this morning’s open.
With safe-haven assets underperforming overnight, we expect broad-based direction to continue fluctuating on headline new updates and events concerning the COVID-19. Attention turns to Fed Chair Jerome Powell as the primary macroeconomic driver in his second day of testimony on Capitol Hill.

Key Movers

The recent outbreak of the coronavirus was given its own name identifying its unique strain by the World Health Organisation yesterday, identifying it now as “COVID-19.” After a solid day of gains in most equity markets around the world yesterday, most are showing green numbers again as concerns over the outbreak seemed to decrease as daily infection rates slowed. China begins preparations to send children back to school and re-open business in a staggered fashion. USD/JPY has finally got a foothold above 110 for the first time in over three weeks after falling short several times over recent days showing evidence there is some confidence returning to the markets. The aussie and kiwi dollars are also higher, with the latter also gaining from a more hawkish interest rate decision from the Reserve Bank of New Zealand. Rates were held at 1% as expected; however, they seem to have closed the door on any further cuts this year as long as the COVID-19 outbreak doesn’t dramatically deteriorate. NZD/USD popped up to .6470 from around .64 dragging AUD/USD higher (as is often the case with the two antipodeans), which rose from about .6710 to currently trade close to .6750.

Expected Ranges

EUR/USD: 1.0887 – 1.0926 ▼

GBP/USD: 1.2945 – 1.2992 ▼

USD/CAD: 1.3245 – 1.3330 ▼

AUD/USD: 0.6711 – 0.6749 ▲

NZD/USD: 0.6398 – 0.6488 ▲


Posted by OFX

Aussie find supports as pace of contagion slows

OFX Daily Market News

Posted by OFX

AUD – Australian Dollar

The Australian Dollar crept higher through trade on Tuesday, pushing back through 0.67 US cents as an injection of risk appetite help foster a shift off key technical supports. Market fears regarding the economic impact of the Coronavirus abated Tuesday as reports filter through suggesting a slowdown in the pace of contagion. The AUD touched overnight highs at 0.6737 before shifting marginally lower to open this morning buying 0.6712 US cents.

AUD direction remains contingent on headline news events and variable market sentiment. As long as the Coronavirus continues to proliferate, we expect the AUD to remain under pressure and test supports at 0.6680 on the heels of adverse news updates and downturns in risk demand. What supports at 0.6680/50and resistance on moves extending beyond 0.6720/30.

Key Movers

The US dollar edged lower through trade on Tuesday, edging off four-month highs as risk appetite improved and demand for haven assets abated. With volatility across FX markets largely non-existence the Greenback remains largely well bid and we expect the broader bullish narrative to continue, especially as investors look to short the Euro in a carry play to foster a higher yield return. The Euro fell through 1.09 touching 1.0870 before the shift in risk sentiment helped foster a small bounce into this morning’s open.

With safe haven assets underperforming overnight we expect broad based direction to continue fluctuating on headline new updates and events in relation to the coronavirus as turn to Fed Chari Jerome Powell as the primary macroeconomic driver.

Expected Ranges

AUD/USD: 0.6680 – 0.6740 ▲

AUD/EUR: 0.6080 – 0.6180 ▲

GBP/AUD: 1.9080 – 1.9480 ▼

AUD/NZD: 1.0380 – 1.0530 ▲

AUD/CAD: 0.8880 – 0.8980 ▲


Posted by OFX

The U.S dollar pares gains following Jerome Powell’s congressional testimony and bets on the Fed easing this year.

OFX Daily Market News

Posted by OFX

USD – United States Dollar

The U.S. dollar was marginally lower this morning amid traders betting that the Fed will ease rates this year. This happened after the release of written congressional testimony from Fed Chairman Jerome Powell. A quarter-point cut by around September this year is already being priced in. The January 2021 fed funds futures imply a rate of 1.215 percent at the end of 2020, when the rate at this moment is 1.75 percent.

Powell said that he is keeping an eye on fallout from the deadly coronavirus outbreak in China, singling his attention on risks threatening the U.S. economy. Following his testimony, the U.S dollar has been moving erratically up and down without taking a clear direction and drawing technical analysis shapes of market indecision.

Key Movers

The USD/CAD pair is trading at 1.3305, representing a fall of 0.1 percent (stronger Loonie); however, it stopped appreciating when Canadian Finance Minister Bill Morneau warned that the spread of the coronavirus is likely to have a “real” impact on Canada’s economy.

In the U.K., there was a mixed bag of data keeping the chances of a Bank of England rate cut this year intact. GDP and manufacturing numbers were released; the positive surprise was the GDP numbers (YoY) which came in at 1.1 percent when the forecast was 0.8 percent. However, industrial production (YoY) came in at -1.8 percent versus a survey of only -0.8 percent, and manufacturing production came in at -2.5 percent versus the -1 percent expected. The trade balance came in positive, probably because of a weak pound over the last few months, at +7,715 million Pounds versus the -350 million pounds expected. As a consequence, the Pound rallies 0.17 percent versus the U.S. dollar, trading at 1.2936. The doubts surrounding the chances of the U.K. reaching a trade deal with the European Union before its transition is keeping the direction of the Pound blurry for the next few days.

The Aussie dollar rallies strongly versus the U.S dollar this morning due to a positive mood in the capital markets and the S&P 500 touching new highs in overnight trading. The AUD/USD pair trades at 0.6772 at the time of this writing.

The Euro held close to a four-month low against the U.S. dollar, trading at 1.0889, an intraday low, as market participants assess the impact of the death toll from the coronavirus, and while uncertainty has emerged in Europe over who will succeed German Chancellor Angela Merkel. The ECB’s policy meeting in January revealed that a rate hike isn’t on the horizon. It also implied its long-awaited strategic review wouldn’t deliver anything meaningful in the next few weeks. This uncertainty is likely another reason for the Euro’s weakness.

Expected Ranges

USD/CAD: 1.3224 – 1.3309 ▼

EUR/USD: 1.0880 – 1.1000 ▲

GBP/USD: 1.2920 – 1.3050 ▲

AUD/USD: 0.6700 – 0.6751 ▲

NZD/USD: 0.6400 – 0.6450 ▲


Posted by OFX

Aussie hits decade low as coronavirus fears escalate

OFX Daily Market News

Posted by OFX

AUD – Australian Dollar

The Australian dollar sank to its lowest level in over a decade on Monday, touching 0.6656 as demand for risk and the economic exposure to China sapped investor demand. Sustained fears the coronavirus will hamper the global economic recovery and dampen Chinese GDP escalated through trade on Monday as the number of confirmed cases pushed through 40,000 and the World Health Organisation issued an ominous warning.

The AUD opens this morning buying 0.6682 US cents and appears set to make a meaningful test of resistance at 0.6680. A consolidation of yesterday’s move and a series of closes below key technical supports could foster a deeper correction and shift toward 0.66. Attentions now turn to commentary from RBA governor Lowe and a string of key US data sets as markers for direction.

Key Movers

The dollar advance continued through trade on Monday as demand for safe haven assets drove direction, while US data sets provide a bullish domestic economic outlook when compared with major counterparts. Fears the coronavirus will continue to spread, hampering the global economic recovery, increased through trade on Monday as the total number of confirmed cases pushed through 40,000. The dollar index touched session highs at 98.86 as attentions turn to commentary from Ped Chair Jerome Powell, as he testifies before the House Financial Services Committee.

The Euro fell to a four-month low through trade on Monday as investors contrast strong US domestic data against lacklustre eurozone metrics. Friday’s strong non-farm payroll print when compared with German industrial output show a stark contrast in economic health across the two economies. German Industrial output recorded its largest single month decline since the recession of 2009, while Italian output also printed below market expectations, amplifying calls for increased stimulus and QE measures. Having touched 1.0907 the single currency found short term support, opening this morning at 1.0911.

The Great British pound touched two and a half month lows on Monday before bouncing higher despite broad based US dollar strength. Having touched 1.2873 in early trade, the pound seemed set to compound last weeks 2.5% sell off as investors looked to correct positions ahead of a string of key data sets. While EU trade talks continue to dominate broader direction, Tuesdays GDP print will provide short to medium term guidance. Recent macroeconomic indicators have hinted at a slight upturn in economic momentum and affirmation will alleviate pressure on the Bank of England to cut rates in the first half of the year. Watch supports on moves below 1.29 with resistance on drives above 1.31 and approaching 1.32.

Expected Ranges

AUD/USD: 0.6630 – 0.6730 ▼

AUD/EUR: 0.6080 – 0.6160 ▲

GBP/AUD: 1.9020 – 1.9450 ▲

AUD/NZD: 1.0380 – 1.0530 ▲

AUD/CAD: 0.6850 – 0.6930 ▲


Posted by OFX

The Greenback falls slightly amid bets that the Fed will send easing signals this week.

OFX Daily Market News

Posted by OFX

USD – United States Dollar

Fed Chair Jerome Powell testifies on Capitol Hill tomorrow and Wednesday to deliver his semi-annual policy report. Market participants will be eager to hear what he has to say and if he provides any hints of change in the so-far robust American economy (such as an easing signal in the next FOMC). What the U.S. dollar has not priced in until now is a probable economic disruption from the coronavirus, which for now seems to be helping the U.S. dollar. Still, today it showed some weakness, probably due to profit-taking action by market participants. Inflation numbers and the University of Michigan Sentiment will be released on Thursday and Friday, respectively, and both can either continue to fuel the rally in the U.S. dollar or the contrary.

According to the Commodity Futures Trading Commission, in the futures markets, there were more flows buying U.S. dollars and Japanese Yen, which reflects up to last Tuesday even though it was released last Friday. This indicates a clear tilt towards risk aversion.

Key Movers

The Euro increased slightly against the U.S. dollar by 0.04 percent after five sessions of losing. So far, the uncertainty of the coronavirus has lifted Asian currency volatility to its highest level in six months and the Greenback to a two-month high.

For now, it will be interesting to follow the AUD/JPY and NZD/JPY pairs to know about how risk is increasing or decreasing. Both pairs can be used as proxies for capturing potential volatility in the global currency market.

In Canada, housing starts increased to 213.2k in January versus an estimated number of 205k. The previous number last month was 196k. Month to month represented an increase of 8.8 percent. However, the Loonie is ignoring the good news and it is falling versus the U.S. dollar 0.11 percent. The reason for the Loonie’s weakness is crude oil’s price pointing towards more losses. Furthermore, significant speculative net-long Canadian currency futures positions fell to 18,563, the lowest since the week ending on January 3rd, according to the latest CFTC data.

Expected Ranges

USD/CAD: 1.3300 – 1.3340 ▲

EUR/USD: 1.0881 – 1.0943 ▼

GBP/USD: 1.2913 – 1.2953 ▲

AUD/USD: 0.6650 – 0.6690 ▼

NZD/USD: 0.6375 – 0.6445 ▼


Posted by OFX

Aussie Dollar falls to lowest level since 2009

OFX Daily Market News

Posted by OFX

AUD – Australian Dollar

Friday’s session saw the Australian Dollar fall from 0.6720 to 0.6662 against the US Dollar, representing its lowest level since the GFC. The AUD, which continues to trade as a proxy for Chinese and global growth, has been burdened by the ongoing Coronavirus situation as the number of confirmed cases continue to rise at a steady pace. Although we did have less dovish commentary from RBA governor Lowe last week, it was not enough to support the AUD as it remained firmly under the 0.67 handle. Lowe pointed to financial stability concerns as a core reason for the central bank’s reluctance to ease rates further this month.

Monday’s session is light on the data front as we expect the AUD to continue to trade on global risk sentiment and in particular, developments in the Coronavirus situation. Analysts will be looking to Chinese inflation and lending data for January as a gauge of how the Chinese economy was tracking before the virus outbreak. We also could see some spillover from the RBNZ cash rate decision on Wednesday, although they are expected to keep rates on hold. From a technical perspective, initial supports can be seen at 0.6662 with any moves lower expected to find further support around 0.6650. On the topside, resistance is expected on moves approaching 0.67 and 0.6724.

Key Movers

Market sentiment continues to deteriorate amid growing concerns around the Coronavirus epidemic gripping Asia. Although we did see some stronger than expected US employment data out of the worlds largest economy on Friday, we saw classic risk off flows as traders continued to brush aside economic data in favor of risk sentiment. US non-farm payrolls were much stronger than expected, coming in at 225K for the month whilst the unemployment rate continues to remain at historical lows.

Safer currencies rose on Friday with the JPY the best performer on the day, ranging between 1.954 and 110 against the USD. The USD index was also up on the day with the EUR falling 40 points from 1.0980 to 1.0942, representing a four-month low. In line with risk sentiment, commodity prices were soft as Crude fell 1.1%, copper 1.3% whilst gold rose 0.2%. With a slow start to the week on the data front, we’re expecting market pricing to continue to take its cues from the evolving coronavirus situation, with growth correlated currencies AUD and NZD to be particularly vulnerable to developments. Notable risk events later in the week are not only the RBNZ’s monetary policy statement on Wednesday but also UK Q4 GDP numbers due out Tuesday, testimony from Fed Chair Powell on Thursday and US CPI numbers due out on Friday.

Expected Ranges

AUD/USD: 0.6625 – 0.6724 ▼

AUD/EUR: 0.6070 – 0.6110 ▼

GBP/AUD: 1.9253 – 1.9351 ▲

AUD/NZD: 1.0393 – 1.0450 ▼

AUD/CAD: 0.8840 – 0.8910 ▼


Posted by OFX

The U.S dollar moves sideways after mixed data in employment.

OFX Daily Market News

Posted by OFX

USD – United States Dollar

The U.S dollar was a mixed bag after the U.S. reported non-farm payrolls rose 225k, which was better than anticipated, but manufacturing payrolls fell 12k versus a forecast of -2k. In general, positive data should be supportive of the U. S dollar over the next few days.

Key Movers

The USD/JPY pair was down 0.2 percent at 109.80 vs 109.92 before the U.S. jobs report. The EUR/USD pair was down 0.2 percent, around 1.0965, before the employment data release.

Despite the gains realized in employment data in Canada, especially in the full-time sector, soft productivity is not helping the Loonie to rally. This shows that productivity in Canada is dropping, despite the labour sector adding jobs.

The Loonie was weaker overnight against the Greenback as oil prices soften amid lingering concern about the spread of the Coronavirus. The USD/CAD pair trades at 1.310 after touching an intraday low of 1.3276 right after the jobs release.

Expected Ranges

USD/CAD: 1.3267 – 1.3321 ▲

EUR/USD: 1.0950 – 1.1013 ▲

GBP/USD: 1.2940 – 1.2991 ▲

AUD/USD: 0.6662 – 0.6702 ▲

NZD/USD: 0.6400 – 0.6457 ▲


Posted by OFX

Retail sales miss hampers AUD’s shallow upturn

OFX Daily Market News

Posted by OFX

AUD – Australian Dollar

Despite a sustained improvement in the demand for risk the Australian dollar failed to maintain upward momentum drifting off intraday highs at 0.6765 and closing lower on Thursday. Softer than anticipated domestic retails sales data and a surprise trade balance contraction dampened demand for the AUD while strength across US labour market indicators helped bolster demand for the world’s base currency. Retail sales data showed consumer spending fell further than anticipated in December a typically strong month for retailers and shoppers spend in the lead up to Christmas. Contracting 0.5% the print suggest a correction following Novembers surprise uptick and marks the 5th monthly decline through the last 6 months, a sign consumer confidence continues to falter. Moving back through 0.6750 the AUD touched intraday lows at 0.6727 as attentions turn to todays RBA monetary policy statement.

Having offered little outside the status quo message after Tuesdays rate announcement today’s quarterly monetary policy review offers a deeper insight into RBA policy thinking. While the labour market continues to underpin the broader economy, other key economic indicators persistently falter amplifying calls for further monetary policy action. Any hint the RBA is leaning towards another rate cut in the first half of 2020 could force the AUD back below 0.67 and test support at 0.6680.

Key Movers

The Great British Pound extended losses through trade on Thursday falling below 1.2950 as uncertainty surrounding trade talks and Britain’s future relationship with the EU weighed on investors. Having enjoyed a period of relative optimism and an expectation that both the UK and EU had at last found some common ground the stalemate and standoff resurfaced. Trade talks have soured already, while comments from French Finance Minister, Bruno Le Maire, suggesting British financial services firms will not have access to EU markets unless they agree to EU rules amplified the divide between British and European expectations. Having fallen 2% this week Sterling touched intraday and year to date lows at 1.2922 and we expect only shallow and short run rally’s through the coming weeks and months with the overwhelming bias still skewed to the downside, that is until a trade agreement and true exit strategy is reached.

Safe haven assets fell for a fourth consecutive day, with both the Yen and Swiss Franc losing ground against the USD as investors appetite for risk continued to improve. Measures taken by Chinese health and economic officials have encouraged markets, fostering increased optimism that the spread of the virus will be contained while the economic fallout will be muted by stimulus measures. The PBoC has pumped billions of dollars into the economy and financial system this week in a bid to get in front of any slowdown that might arise as a result of the virus while officials report “positive” results in preventing further widespread contamination.

The Euro touched two-month lows against the Greenback following weaker than anticipated industrial manufacturing orders in December. Data showed new orders for German made goods fell over 2% in the lead up to X=Christmas, the largest monthly depreciations in 10 months and well off the forecast .6% upturn. Falling below 1.10 the Euro opens this morning at 1.0978.

Expected Ranges

AUD/USD: 0.6680 – 0.6770 ▼

AUD/EUR: 0.6080 – 06150 ▼

GBP/AUD: 1.8970 – 1.9330 ▼

AUD/NZD: 1.0350 – 1.0480 ▲

AUD/CAD: 0.8890 – 0.8990 ▼


Posted by OFX

The Greenback is trading to new one-month highs, backed by robust economic data.

OFX Daily Market News

Posted by OFX

CAD – Canadian Dollar

The U.S. dollar is steady and haven currencies such as the Japanese Yen are slightly lower as virus concerns have begun to fade among market participants and investors and after China said it plans to half tariffs on some imports from the U.S. later this month.

U.S. jobless claims fall 15k to 202k, versus an estimated of 215k; the lower the number relative to the expected value, the better for the U.S. dollar, such as in this case.

Yesterday, Mary Daly, San Francisco Fed President, said in regards to the Coronavirus, “I expect China to have a couple of quarters of weaker growth and then bounce back once this has been resolved, and then that to have a temporary impact on the U.S. economy and go away once things have been resolved.”

Key Movers

The EUR/USD pair touched its daily high of 1.1014 after European Central Bank President Christine Lagarde told European Parliament lawmakers that policymakers have few options for more monetary stimulus after many years of economic crisis-fighting. She was implying that the ECB will not be more dovish or cut rates in even more negative territory. However, the EUR/USD pair is up only 0.05 percent, trading at 1.1003 at this moment.

Expected Ranges

USD/CAD: 1.3243 – 1.3323 ▲

EUR/USD: 1.0986 – 1.1023 ▲

GBP/USD: 1.2941 – 1.3000 ▼

AUD/USD: 0.6721 – 0.6747 ▼

NZD/USD: 0.6450 – 0.6490 ▼


Posted by OFX