Aussie under sustained pressure having broken key technical supports

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AUD – Australian Dollar

The Australian Dollar came under sustained pressure on Tuesday despite a general calm spreading across markets as investors reassessed the possible impact of the Coronavirus. While the virus continues to spread at an alarming rate within China, the low mortality rate has fostered some level of optimism, when compared with SARS, and an expectation that impacts to GDP could be confined within the Asia Pacific region with China, Hong Kong, Taiwan and Australia perhaps the hardest hit. The biggest concern for the Australian economy at present is the expected impact tourism and tourism spending. Reportedly group tourism from China has been banned through the coming months, at least until the virus is contained, a huge hit to local economies with Chinese tourist making up 28% of all tourism spending.

The AUD fell a further 0.2% to touch intraday lows at 0.6750 as attentions turn to today’s CPI inflation print. A lacklustre read could amplify calls for the RBA to bring forward additional rate cuts and with futures indicators pricing in just a 30% chance for a cut in February there is scope for further downside pressure should numbers miss the mark. Watch supports at 0.6750 with a break possibly prompting a move toward .6670/90.

Key Movers

The Great British pound was the biggest looser through trade on Tuesday falling back through 1.30 for the first time since mid-January. Touching one-week lows Sterling came under pressure when valued against both the USD and Euro as the reality of the UK leaving the European single market on Friday and the possibility of a Bank of England Rate cut today sink in. Having touched 1.2975 the Pound found some support edging back toward 1.30 into the close as investors appear reluctant to pull the trigger and extend moves ahead of these two key market events.

The US Dollar bounced against other safe haven assets, up against both the Yen and Swiss Franc as concerns concerning the Coronavirus calmed through Tuesday. While news and headlines are running on a 24-hour delay, the low mortality rate has helped ease fears the impact of the virus will spread to the broader global economy, fostering an expectation the economic impact will the largely regionalised.

US consumer confidence also rose by more than expected, touching 5 month highs while durable goods orders where bolstered by increased defence spending. The dollar index is up 0.02% at 97.98 at time of writing. Attentions now turn to tonight FOMC policy decision as a key marker governing direction. We anticipate policy makers will leave rates unchanged.

Expected Ranges

AUD/USD: 0.6670 – 0.6830 ▼

AUD/EUR: 0.6050 – 0.6190 ▼

GBP/AUD: 1.8980 – 1.9420 ▼

AUD/NZD: 1.0280 – 1.0420 ▲

AUD/CAD: 0.8820 – 0.8980 ▼


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Coronavirus dominates headlines and hampers risk appetite

OFX Daily Market News

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AUD – Australian Dollar

The Australian dollar fell through trade on Monday as limited liquidity over the Australia Day and Chinese New Year holidays amplified risk moves and forced a move below 0.68. Australia’s exposure to the Chinese economy and its impact on domestic tourism has sparked fears the spread of the coronavirus will undo recent optimism around the US/China trade deal and dampen demand for Australian raw materials. The AUD touched its lowest level since December 2nd at 0.6752 as commodity prices plunged lower. Both copper and crude oil both lost 3% through trade on Monday highlighting concerns around Australia’s exposure to China, exacerbating recent underperformance.

With little headline data on hand Tuesday to drive domestic direction attentions this week remain squarely focused on developments of the coronavirus. With volatility low news of a cure could help bolster an AUD recovery and shift back above 0.68 and 0.6850 ahead of tomorrow’s all important CPI inflation report.

Key Movers

The US dollar, Japanese Yen and Swiss Franc all rose through trade on Monday as mounting fears the coronavirus will morph into a global health emergency spooked markets and pushed investors toward safe haven assets. Concerns health authorities have not reacted fast enough to contain the spread of the deadly respiratory virus have forced markets to the sidelines and seen the Chinese yuan come under heightened selling pressure. The CNY fell to its lowest level this year and its weakest level since December 30 touching 6.99 having lost almost 1%. Until we see a shift in headlines and some optimism surrounding a cure we expect risk appetite to remain muted and safe haven assets will continue to benefit.

The Great British pound shifted lower through trade on Monday as investors position themselves ahead of this week’s Bank of England’s policy meeting. A largely positive Services and Manufacturers PMI print on Friday helped quell calls for a rate cut. Having touched fortnight highs at 1.3180 sterling shifted to 1.3056 as investors prepare for Wednesday’s policy decision with just over 50% of analysts pricing in a rate cut.

Expected Ranges

AUD/USD: 0.6730 – 0.6830 ▼

AUD/EUR: 0.6080 – 0.6180 ▼

GBP/AUD: 1.9175 – 1.9480 ▲

AUD/NZD: 1.0280 – 1.0380 ▼

AUD/CAD: 0.8860 – 0.8970 ▼


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The U.S. dollar touches new highs ahead of the FOMC release tomorrow.

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USD – United States Dollar

The Greenback climbs for a fourth day amid a return of risk appetite ahead of a two-day FOMC meeting and as global efforts are made to address the spread of the Coronavirus. Furthermore, durable good orders came in at 2.4 percent versus 0.3 percent (better than expected), which is also helping the U.S. dollar.

Key Movers

The British Pound fell 0.22, 0.3, and 0.31 percent versus the Aussie dollar, Loonie and U.S dollar, respectively. According to Bloomberg, strategists were attributing the move to negative Brexit headlines and market nervousness around Thursday’s Bank of England meeting. Market participants were responding with selling pressure to headlines from both U.K. & EU officials before the exit day, which is on Jan 31st. This Thursday, BoE Mark Carney’s final decision is very uncertain. Furthermore, Sterling volatility has been increasing over the last few hours as we approach the Thursday BoE decision, when volatility is expected to further increase. The worries about the Pound are more complicated now, with Prime Minister Boris Johnson’s government set to allow Huawei Technologies Co. to build fifth-generation wireless networks, which might complicate relations with the U.S.

Expected Ranges

USD/CAD: 1.3155 – 1.3206 ▼

EUR/USD: 1.1000 – 1.1041 ▼

GBP/USD: 1.2975 – 1.3035 ▼

AUD/USD: 0.6740 – 0.6780 ▼

NZD/USD: 0.6521 – 0.6555 ▼


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Australian Dollar holds above 68c ahead of Australia Day Holiday

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AUD – Australian Dollar

The Australian Dollar has held above the 68c mark vs the Greenback despite some weak numbers coming out of Australia’s January PMI figures. The manufacturing side saw a print of 49.1 vs an expected 49.2 and the Flash Composite Output Index was down from 49.6 to 48.6. The weakness has been driven by the recent bushfires and fundamental weakness in the Australian economy, associated with consumer constraint in the residential construction downturn and the reluctance of business to invest. Businesses have been disrupted by the bushfires through the supply chains and also through tourism. It’s not all doom and gloom and expectations for future businesses are at encouraging levels. Meanwhile, the pair has also been affected by a stronger US dollar on Friday as well as concerns over the coronavirus in China.

The AUD/USD opens this morning at 0.6824 and with Australia observing a Public and Bank holiday moves are likely to be limited. We can expect to see initial support at 0.6800 on the downside. Resistance sits at 0.6880 followed by 0.6920.

Key Movers

The US Dollar Index which measures the strength of the Greenback against a basket of six major currencies rose on Friday as data showed ongoing strength in the U.S. services sector offset a continued slowing in manufacturing to a three-year low. The IHS Markit flash purchasing managers index for manufacturing in fell to a 3-month low in January, while the services PMI strengthened to highest level since last March.

GBP/USD pulled back from two-week tops and dropped to a low of 1.3056 failing to capitalize on upbeat PMI data with speculation of Bank of England cutting rates prompted some selling. Markets are still pricing in a 45% of the BoE cutting rates this week. Meanwhile, EUR/USD hit seven-week lows after data revealed Eurozone growth was left muted at the start of 2020 with January’s PMI data expanding at the same pace that was seen in December 2019.

Expected Ranges

AUD/USD: 0.6800 – 0.6880 ▼

AUD/EUR: 0.6160 – 0.6240 ▲

GBP/AUD: 1.8900 – 1.9350 ▼

AUD/NZD: 1.0270 – 1.0440 ▼

AUD/CAD: 0.8920 – 0.9040 ▼


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The Greenback does not have a clear direction this week following the outbreak of the Coronavirus.

OFX Daily Market News

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USD – United States Dollar

The Greenback is trading flat this morning because the U.S. economic data calendar for today is almost empty. However, later today, a few data point releases are anticipated including the December new home sales and January Dallas Fed manufacturing activity index. The most critical release this week will be the FOMC rate decision on Wednesday.

The U.S. dollar has not changed much over the last few hours. The EUR/USD pair fell to 1.1015 following a sluggish and weak German IFO survey, but it has made an intraday high of 1.1038. The only currencies that are doing better than the Greenback are the Yen and Swiss Franc, which are beating the USD by 0.33 and 0.29, respectively.

Key Movers

Because of the Coronavirus, the USD/JPY pair is falling 0.33 percent this morning, trading at 108.91 at the moment. The Japanese Yen, the most popular “haven” currency, already increased versus the Aussie dollar, the Euro, and the U.S dollar this morning. The risk that market participants are not talking about is the implications of the Coronavirus on China and global growth. For now, the USD/CNH pair could especially be pressured to the upside (with the CNH -Chinese Yuan- going lower). Last Saturday, Chinese president Xi Jinping already expressed public worries about the risk of an accelerated spread of the illness. Cases have been reported in more than 12 countries so far and counting.

The Aussie dollar is paying for the consequences of the Coronavirus because of geographical reasons. The AUD/USD pair is falling 0.86 percent at the time of this writing, trading at 0.6773.

Expected Ranges

USD/CAD: 1.3150 – 1.3200 ▲

EUR/USD: 1.1005 – 1.1055 ▼

GBP/USD: 1.3050 – 1.3083 ▼

AUD/USD: 0.6750 – 0.6817 ▼

NZD/USD: 0.6550 – 0.6584 ▼


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Strong labour market not enough to hold up AUD

OFX Daily Market News

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AUD – Australian Dollar

The Australian dollar enjoyed mixed fortunes through trade on Thursday, bouncing back toward 0.69 on the back of strong jobs data before giving up gains and closing lower on the day. The domestic unemployment rate fell to 5.1% in December while employment growth grew at a faster pace than expected, propelling the AUD to intraday highs at 0.6880. The positive print helps lessen the likelihood of an RBA rate cut in the near term with futures pricing cut in half for a February hike, down to a 30% probability from 60%.

The AUD was however, unable to sustain the advance giving up all the morning gains as risk off sentiment permeated broader markets. Currencies, equities and commodities all turned lower with investors looking to safe haven assets as fears the coronavirus will extend its reach again spooked markets. Officials in Wuhan province, the centre of the virus outbreak, have halted all outbound transport services, quarantining the city in a bid to halt the viruses spread. With travel warnings now in place for China, markets are concerned as to what this will mean for Chinese domestic consumer demand and its run on effect to global growth. The AUD fell back through 0.6850, marking new year to date lows at 0.6830.

With little of note on the domestic docket today we expect another largely rangebound session with risks skewed to the downside as risk sentiment continues to falter.

Key Movers

Traditional safe havens were the primary benefactors through trade on Thursday with both the Japanese Yen and Swiss Franc trending upward as investor nervousness sapped broader market demand for risk.

Sterling extended the weeks upturn and built on month long highs as the risk of a central bank rate cut continued to fade. A string of stronger than anticipated macroeconomic data sets have quelled calls for immediate Bank of England policy action with investors now pricing in a 50/50 chance of a rate cut next week, down from 70% on Monday. Having touched 1.3152 sterling edged marginally lower into the New York close as risk off sentiment swept the market. Attentions now turn to today’s manufacturing and services PMI prints as the last key data piece prior to the January 30 BoE policy meeting.

The Euro trended lower following the ECB policy meeting and pricing review announcement. While the Lagarde and her policy setting committee left rates and QE unchanged they announced a wide sweeping policy review. With rates unlikely to change in the near term the Euro consolidated moves below 1.11 as a dip in consumer confidence compounded moves. Having touched 1.1035 the Euro opens this morning at 1.1055

Expected Ranges

AUD/USD: 0.6810 – 0.6880 ▼

AUD/EUR: 0.6150 – 0.6230 ▲

GBP/AUD: 1.8750 – 1.9350 ▼

AUD/NZD: 1.0290 – 1.0480 ▼

AUD/CAD: 0.8950 – 0.9050 ▼


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The U.S. dollar rose for a third week, however purchasing numbers in manufacturing pared gains.

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USD – United States Dollar

The Greenback is ending the week higher for a third week, amidst worries about the virus in China and a strong North American equity market. The offshore Yuan weakened due to concerns about the spread of the coronavirus. However, the most important piece of local economic data came from flash manufacturing PMI numbers, which is a survey of purchasing managers in the manufacturing industry in the U.S.

According to IHS Markit, which compiles Purchasing Managers Index (PMI) worldwide, the Flash U.S. Composite Output Index came in at 53.1 (January) versus 52.7 in December, which is a 10-month high. However, the Flash U.S. Manufacturing PMI came in at a 10-month low of 51.7, while 52.5 was expected and 52.4 was reported in December.

At the time of this writing, the EUR/USD trades at 1.1130, representing a decrease of 0.23 percent.

Key Movers

The Euro got slammed after ECB Governing Council Member Olli Rehn said that the Euro area inflation expectations are stranded at a depressed level. However, IHS Markit’s composite Purchasing Managers’ Index for Germany rose to a five-month high of 51.1 in January, beating forecasts for a 50.5 reading. Furthermore, very early today in Europe, the composite PMI in the Eurozone was unchanged, coming in at 50.9 in January, which was the same as in December but below the estimate of 51.2. According to Bloomberg Economics, this is consistent with the expansion staying broadly stable in the first month of 2020. Bloomberg Economics expects sentiment and activity to start improving more decisively into 2020.

What happened with the Pound was even more astonishing. Although the robust PMI numbers confirmed positive data for the U.K. economy, the Sterling tumbled, inducing market participants to sell likely to avoid the risk of a rate cut next week, which for now is staying at 0.75 percent. The Sterling had been rising over the previous few days, but it fell after Friday’s U.K. Purchasing Managers’ Index data rose to the highest level since 2018 in January. Most market participants are wondering if this is just a profit-taking price action or if there is something else that the market is pricing.

Expected Ranges

USD/CAD: 1.3121 – 1.3172 ▲

EUR/USD: 1.1025 – 1.1069 ▲

GBP/USD: 1.3080 – 1.3135 ▲

AUD/USD: 0.6800 – 0.6850 ▼

NZD/USD: 0.6581 – 0.6615 ▼


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Languid AUD fails to mount upside push as attentions turn to labour market data

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AUD – Australian Dollar

The AUD struggled to mount any upward momentum through trade on Wednesday as moves across antipodean currencies remained largely muted. Despite an uptick in broader risk sentiment following fears the Coronavirus will spread and morph into a SARS like global epidemic abated the AUD failed to lift off recent lows and extend meaningfully beyond 0.6850. Investors appeared reluctant to extend moves prior to today’s employment change and unemployment rate prints as labour market data remains crucial in governing RBA policy. A strong read will stave off calls for additional RBA monetary policy adjustments and afford policy setters time and ammunition to combat any future slowdowns in growth. With strong supports still in place on moves approaching 0.6830/0.68 and October 2019 lows we expect the AUD to maintain short term ranges with a view to possible upside in the latter half of 2020.

Key Movers

The US dollar index edged downward through trade on Wednesday, following the Yen and Swiss franc lower amid easing demand for safe haven assets. Early week concerns the Coronavirus would spread beyond China and develop into a SARS like epidemic abated Wednesday as Chinese health officials proffer greater transparency into the viruses management and its path to limiting the global fallout.

The Canadian Dollar slipped in the wake of the Bank of Canada’s monthly monetary policy meeting. While policy setter’s opted to leave rates on hold at 1.75% there was suggestion a rate cut would be appropriate should the recent slowdown on growth continue.

The Great British Pound advanced through trade on Wednesday following a stronger than expected uptick in manufacturer’s sentiment, dampening calls for a Bank of England rate cut next week. Expectations for a policy shift have abated through the week thus far with futures pricing in a 50% chance of a rate cut on January 30, down from 70% on Monday. Advancing to one month highs against the Euro and two week highs against the USD our attentions now turn to Friday’s PMI print, a key indicator which could sway the interest rate debate.

Expected Ranges

AUD/USD: 0.6790 – 0.6890 ▼

AUD/EUR: 0.6150 – 0.6250 ▼

GBP/AUD: 1.8920 – 1.9410 ▲

AUD/NZD: 1.0330 – 1.0450 ▼

AUD/CAD: 0.8930 – 0.9080 ▲


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The Greenback trades sideways after the release of a very balanced European Central Bank monetary policy.

OFX Daily Market News

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USD – United States Dollar

The U.S. dollar continues to trade sideways following a relatively balanced speech from Christine Lagarde. The only piece of economic information came from the unemployment insurance weekly claims, which came in at 211k. This represents an increase of 6k from the previous week. See the key movers section below for more details.

Key Movers

In the FX world, the mood is deteriorating. Safe-haven currencies are being favored, which usually does not help Asian currencies such as the Yuan. One of the reasons for this is the ongoing concern about the coronavirus. Just a few minutes ago, Singapore confirmed the first case of the virus as the outbreak grows. The offshore Chinese Yuan has fallen 0.28 percent versus the Greenback this morning.

A few minutes ago, the ECB left their refinancing rate unchanged at 0 percent, and their deposit facility rate at -0.5 percent, as expected. It was one of the least exciting ECB policy meetings in more than five years, and it was visualized through the options market – a sophisticated financial tool in the capital markets. Remarks from Lagarde are usually very balanced, but she said that the ECB would be over when it is over, sending the Euro to a new low (1.1053 intraday low) not reached since December 2019. The Euro initially spiked, capturing many buyers on the back foot – it had reached 1.1108 initially right after Lagarde opened her press conference, but all those gains are gone. Lagarde refused to reveal her preference for an inflation strategy and pointed to a moderate increase in inflation. She also did not want to make comments on the Riksbank in Sweden, which wants to reverse negative rates.

The last piece of information that might not send the Euro even lower is Lagarde’s comments that the ECB will take a look at the adverse side effects of negative rates.

Expected Ranges

USD/CAD: 1.3121 – 1.3172 ▼

EUR/USD: 1.1039 – 1.1100 ▼

GBP/USD: 1.3100 – 1.3212 ▼

AUD/USD: 0.6800 – 0.6852 ▲

NZD/USD: 0.6582 – 0.6611 ▼


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The U.S. dollar falls as the coronavirus in China seems as though it will be contained.

OFX Daily Market News

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USD – United States Dollar

The U.S. dollar fell after China’s National Health Commission announced plans to contain the coronavirus. Still, market participants continue to keep an eye on the economic impact of the coronavirus in China. The Greenback is down against all of its G-10 peers, except for the Japanese Yen and Swiss franc. The EUR/USD erased losses in the European session, and it is increasing 0.1 percent at this time of this writing.

The U.S. dollar also took a hit following President Trump saying in an interview from Davos that, “The dollar’s very, very strong,… it’s very bad in terms of manufacturing”.

Key Movers

The British Pound is a top performer, increasing 0.61 percent versus the U.S dollar. Bets of a potential BoE interest-rate cut this month fall after a report showed an increase in optimism among U.K. manufacturers / strong U.K. business sentiment.

Inflation numbers in Canada were released a few minutes ago, and they are pulling the Loonie back from session highs due to a miss on headline inflation. Inflation came in at 2.2 percent, versus the 2.3 percent expected.

The USD/CAD was trading at 1.3041, falling 0.21 percent (stronger Loonie) ahead of the BoC monetary policy announcement. According to Bloomberg Economics, the Monetary Policy Report will show economic growth headwinds coming from December; therefore, impacts will be felt by the Loonie if the BoC changes its view on its flexibility regarding how to tackle the recent economic slowdown. If the BoC’s view changes from temporary to persistent, the Loonie will be driven lower. If the BoC keeps saying that this is a temporary situation (regarding the recent economic slowdown), the Loonie will be driven higher.

Expected Ranges

USD/CAD: 1.3020 – 1.3120 ▼

EUR/USD: 1.1075 – 1.1110 ▲

GBP/USD: 1.3075 – 1.3151 ▲

AUD/USD: 0.6825 – 0.6855 ▼

NZD/USD: 0.6582 – 0.6619 ▼


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