Aussie range bound as currency markets subdued

OFX Daily Market News

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AUD – Australian Dollar

The Australian dollar crept lower through trade on Thursday despite another uptick in equities. A stronger than anticipated US non-farm payroll report followed a slew of better than expected macroeconomic indicators, bolstering hopes a swift economic rebound is still possible. Equities rallied in the wake of the announcement with the S&P500 advancing nearly 1%, however the risk-on mood did not extend to currency markets and the AUD struggled to hold onto intraday highs approaching 0.6950. The correlation between equity gains and the AUD has dissipated this week with the AUD firmly range bound. While investors remain optimistic Central Banks will continue to backstop and prop up financial markets, heightened concerns the uptick in COVID-19 cases throughout the US and now Victoria will derail the economic recovery are weighing on markets, preventing equity gains from spilling into other asset classes.

Attentions remain squarely affixed to coronavirus headlines with the AUD unlikely to break outside recent ranges, trading between 0.68 and 0.70 into the weekly close.

Key Movers

Currency markets remained subdued through trade on Thursday with G10 currencies confined to tightening ranges, as the risk-on rally enjoyed across equity markets failed to spill into other financial asset classes. The US dollar index edged higher as stronger than anticipated US non-farm payroll data bolstered hopes of a swift rebound in economic activity. The US economy added nearly 5 million new jobs in June, well above median estimates and a strong sign that with re-opening comes improvement in labour market indicators. Despite strong gains in hospitality and leisure, the data was not all positive. Unemployment still remains high and over 11%, while the number of workers now unemployed who were previously subject to temporary layoffs increased by nearly 3 million. This shift in employment status from temporary to full time is worrying as it suggests underlying business are struggling to cope with the extended lock down period. With many US states now re-introducing strict social distancing measures in a bid to curtail the rapid spread of the virus, June’s strong performance could simply be nothing more than a false dawn.

Attentions today remain squarely affixed to broader risk trends with coronavirus headlines dominating direction.

Expected Ranges

AUD/USD: 0.6830 – 0.6960 ▼

AUD/EUR: 0.6080 – 0.6210 ▲

GBP/AUD: 1.7880 – 1.8120 ▼

AUD/NZD: 1.0580 – 1.0720 ▼

AUD/CAD: 0.9350 – 0.9430 ▼


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AUD creeps higher on promise of COVID19 Vaccine

OFX Daily Market News

Posted by OFX

AUD – Australian Dollar

The Australian dollar advanced through trade on Wednesday, extending moves above 0.69 US cents following a risk on move driven by news Pfizer and BioNtech’s early trial of a COVID19 vaccine has shown promising results. Having traded sideways for much of the domestic session the AUD struggled to mount any real upward momentum as concerns over new security laws in Hong Kong overshadowed a surprise uptick in Chinese manufacturing and services data. An increasing number of arrests in Hong Kong have fostered fears Beijing is pushing to end the One Country, Two systems model, promoting increased tensions within the region and dampening demand for risk. The AUD touched intraday lows at 0.6880 and look set to close the day lower before the last-minute risk on run. A surprise uptick in US manufacturing data helped fuel the risk on run as investors jumped on reports Pfizer and BioNtech could have a 100 million doses of the vaccine ready by the end of the year. Investors and analyst appeared to place greater stock in the vaccine news, choosing to ignore the increasingly worrying and largely unchecked spread across the US as plans to continue the broader economic re-opening are put on hold. Having touched session highs at 0.6937 the AUD crept lower into the close and currently buys 0.6916 US cents.

Attentions remain squarely affixed to Coronavirus headlines with the AUD entrenched within recent ranges. Having failed in its attempt to advance beyond 0.70 US cents the AUD is now bouncing between support at 0.68 and resistance at 0.70 amid the eb and flow of risk demand.

Key Movers

The Great British Pound was again the days top performer, advancing against major counterparts and extending Tuesday’s rally to push above 1.24 and 1.2450. While there were no obvious triggers for Sterling’s sustained uptick, the risk on run created by improved US macroeconomic data and the promise of a COVID19 vaccine before the end of the year have helped drive the currency higher. The Pound was one the worst performing major units throughout June plunging almost 5% and as such appears relatively cheap. There is a sense that the early quarter uptick is merely a correction in last months sell off and investors taking advantage of a reasonable buying opportunity.

Safe havens struggled again as the USD and broader dollar index both fell, while the JPY was forced lower on the back of the late risk on move. Currency ranges have become much more constrained following the volatility of March, April and May with fluctuations amid set ranges governed by the eb and flow of risk demand. With contrasting forces pulling in either direction the question is now which side will win out.

Expected Ranges

AUD/USD: 0.6830 – 0.6980 ▲

AUD/EUR: 0.6050 – 0.6180 ▲

GBP/AUD: 1.7850 – 1.8280 ▲

AUD/NZD: 1.0620 – 1.0720 ▼

AUD/CAD: 0.9320 – 0.9420 ▲


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Employment figures strengthen US dollar

OFX Daily Market News

Posted by OFX

USD – United States Dollar

US employment figures released this morning increased the strength of the US dollar against its larger trading partners in Canada, Great Britain and Europe.

The dollar climbed higher on positive jobs numbers. Total nonfarm payroll employment rose by 4.87 million in June, and the unemployment rate declined to 11.1 percent, the U.S. Bureau of Labor Statistics reported this morning. Weekly unemployment claims dropped for the thirteenth week in a row.

The job creation and unemployment numbers are important leading indicators of consumer spending and provide overall insight into economic activity. Despite these positive indicators, COVID-19 continues to dominate trends. Most currency pairs with the US dollar remain entrenched within recent ranges.

Key Movers

The British pound ticked higher in the past 24 hours, but with little local data to drive it. Comments from Bank of England’s Jonathan Haskel helped the pound advance. He said that retail sales and spending more broadly appear to be recovering from their April lows, and that expected Q2 as a whole will not be quite as negative.

Risk sentiment was boosted by a COVID-19 vaccine from Pfizer and Germany’s BioNTech, which was found to be well tolerated in early-stage human trials. The 45 people that participated in the trial, which included placebos, saw a V-shaped recovery. Welcome news for the global economy that continues to tackle the virus and get back on its feet. This improved risk appetite has seen investors and traders sell their safe haven currencies and take a cautionary look at riskier assets. This can be seen in AUD and NZD gains against a basket of safe havens, such as the USD, overnight.

Expected Ranges

USD/CAD: 1.356 – 1.362 ▲

GBP/USD: 1.246 – 1.252 ▲

EUR/USD: 1.122 – 1.13 ▲

USD/AUD: 1.440 – 1.448 ▲


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Month end rebalancing and risk on mood push AUD back toward 0.69

OFX Daily Market News

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AUD – Australian Dollar

The Australian dollar trended higher through trade on Tuesday, buoyed by a surge in demand for risk as month end flows dominated direction. Having traded sideways for much of the domestic session the AUD bounced off intraday lows at 0.6838 and pushed back through 0.69 US cents following equities higher. The S&P 500 advanced nearly 1% on the day closing out its best quarterly performance in over 20 years, highlighting just how quickly financial markets have bounced back from the panic that enveloped markets at the beginning of the COVID-19 pandemic. The question now is, can the upturn be sustained? The alarming uptick in new coronavirus infections has certainly curbed the pace of gains enjoyed through April and May, while underlying fundamentals suggest a long and protracted broader economic recovery. Victoria’s introduction of localised lockdown measures across key postcodes ensures the threat of the coronavirus will continue to weigh on consumers and the broader economy well into the 2nd half of 2020. As the risk on move that drove the AUD higher through April and May appears more fragile, we anticipate a period of consolidation. Gains above 0.69/0.6950 will likely be hard won as mounting uncertainty caps upside moves. We expect supports at 0.6830/0.68 will hold through the short term, with a definitive risk off shift the primary threat. Having been one of the best performing major currencies through Q2 we expect a much tighter trading range through Q3. Until markets focus shifts away from risk and back to the underlying economic fundamentals, we expect a protracted period of choppy trade with firmer support and resistance bands.

Key Movers

The Great British Pound was the days top performer on Tuesday, advancing three quarters of a percent after Boris Johnson promised an injection of 5billion pounds into new infrastructure projects in a bid to drive domestic growth and employment. The GBP jumped back through 1.23 and 1.2350 before resistance on moves at 1.2390/1.24 stoppered further gains. Despite the late upturn the Pound was among the worst performers in June as the UK continued its struggle to contain the coronavirus, while hard Brexit fears again loom large with the final divorce date at the end of the year approaching rapidly.

Haven currencies underperformed with the JPY and USD giving up gains as the risk on narrative fuelling equity markets filter into currencies.

Attentions today turn to preliminary US employment data and a host of European and Asian manufacturing data sets. While fundamental still take a back seat to risk, improved manufacturing conditions may over some hope a broader economic rebound is still on track.

Expected Ranges

AUD/USD: 0.6830 – 0.6950 ▲

AUD/EUR: 0.6020 – 0.6180 ▲

GBP/AUD: 1.7820 – 1.8050 ▲

AUD/NZD: 1.0650 – 1.0720 ▼

AUD/CAD: 0.9280 -0.9420 ▼


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Positive jobs numbers can’t lift economic outlook

OFX Daily Market News

Posted by OFX

USD – United States Dollar

Private sector employment increased by 2,369,000 jobs from May to June according to the June ADP National Employment Report released this morning. While this was below expectations, it was a positive sign that hiring picked up in the month of June.

The data provides an early look at employment growth, and job creation is a leading indicator of consumer spending. The ADP jobs data stood in stark contrast to yesterday’s activity.

The US dollar came under pressure yesterday as coronavirus cases rose by 47,000 showing the US is losing its battle with the pandemic. California, Texas and Arizona have emerged as new US epicenters of the pandemic. Already states have begun to reimpose lockdowns. This, along with continual US-China tensions, and the US dollar being sold at end of quarter flow, overshadowed local data that was starting to paint a prettier picture on recovery.

EUR/USD touched 1.1250 yesterday and GBP/USD topped at 1.2400. Until market focus shifts away from risk and back to the underlying economic fundamentals, we expect a protracted period of choppy trade with firmer support and resistance bands.

Key Movers

UK GDP data did little to help the falling pound yesterday morning with the final q/q figure coming in worse than expected. The early news saw the pound drop to 1.2260 versus the US dollar and 1.0935 against the euro. Prime Minister Boris Johnson announced a plan to fast-track GBP 5 billion of infrastructure investment and slash property planning rules to revive the UK economy. The news was expected and had little impact on the pound as many believe it is too low a figure when taking into consideration the increase in recent government intervention/stimulus to aid the UK recovery from the pandemic.

The Australian dollar trended higher through trade on Tuesday, buoyed by a surge in demand for risk as month end flows dominated direction. Having traded sideways for much of the domestic session the AUD bounced off intraday lows at 0.6838 and pushed back through 0.69 US cents following equities higher. The S&P 500 advanced nearly 1% on the day closing out its best quarterly performance in over 20 years, highlighting just how quickly financial markets have bounced back from the panic that enveloped markets at the beginning of the COVID-19 pandemic. The question now is, can the upturn be sustained? The alarming uptick in new coronavirus infections has certainly curbed the pace of gains enjoyed through April and May, while underlying fundamentals suggest a long and protracted broader economic recovery.

Haven currencies underperformed with the JPY and USD giving up gains as the risk on narrative fueling equity markets filter into currencies.

Expected Ranges

USD/CAD: 1.355 – 1.361 ▼

GBP/USD: 1.236 – 1.246 ▼

EUR/USD: 1.119 – 1.127 ▲

USD/AUD: 1.44 – 1.452 ▲


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AUD range bound amid growing COVID19 concerns

OFX Daily Market News

Posted by OFX

AUD – Australian Dollar

The Australian dollar drifted sideways through out trade on Monday, bouncing between 0.6850 and 0.6890 amid a largely tepid start to the week. Moves across currency markets were muted despite a bounce in risk demand that saw equities recoup Friday’s sell off. The S&P 500 rallied over 1% Monday, unwinding Friday’s risk off move as investors continue to buy the dip on a broader hope the global recovery is still on track. Despite heightened whipsaw action across equity markets the AUD appears largely range bound, with traders reluctant to extend topside gains beyond 0.70 US cents while supports at 0.6840 and 0.68 are holding firm for now. Coronavirus infection rates in the US are rising at an alarming rate while Victoria struggles to control its own outbreak, while the global spread of the disease shows little signs of slowing. While there is still an overwhelming sense a global v-shaped recovery is possible, the recent resurgence in infections rates serves as a reminder that the promise of full-scale economic re-opening may still be some time off., forcing investors to check the recent risk on run.

Attentions today turn to Chinese PMI data and domestic weekly labour market indicators as markers of macroeconomic health. Risk remains the primary driver and as markets continue to grapple with the uncertainty that is COVID19 the threat of a broader risk off move remains a short-term concern.

Key Movers

Haven currencies were the days big losers as the JPY and CHF both retreated amid an equity led risk on move. While price action across currency markets was largely muted throughout trade on Monday the rebound in the S&P 500 did prompt a small risk on correction forcing the Yen and Franc near half a percent lower as the promise of sustained Federal Reserve support continues to prop up equity markets. Despite growing concerns the renewed COVID19 outbreak will derail the v-shaped recovery and disrupt the risk on mood there is a sense the Fed will simply step in and support financial markets by any means necessary, propping up equity prices and perhaps sustaining the current risk on move beyond its natural lifeline.

The Great British Pound Fell through trade on Monday as concerns regarding Brexit and Britain’s ability to fund planned fiscal infrastructure programs forced the below 1.23 to intraday lows at 1.2252.

Attentions today remain squarely affixed to the evolving fight against COVID19 as risk continues to drive direction and underlying fundamentals are largely ignored.

Expected Ranges

AUD/USD: 0.6810 – 0.6950 ▼

AUD/EUR: 0.5980 – 0.6150 ▼

GBP/AUD: 1.7780 1.8120 ▼

AUD/NZD: 1.0650 – 1.0720 ▲

AUD/CAD: 0.9320 – 0.9420 ▼


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Powell, Mnuchin in spotlight at Congressional committee

OFX Daily Market News

Posted by OFX

USD – United States Dollar

Federal Reserve Chairman Jerome Powell sits down today with Treasury Secretary Steven Mnuchin before the House of Representatives Financial Services Committee.

Followers can expect much of the same rhetoric. The path forward in uncertain. Full recovery is unlikely until people feel safe. The Fed is committed to using its full range of tools. According to The Economist, America has gone all out. The fiscal stimulus is worth 15% of GDP and the Fed’s balance-sheet has swollen by trillions of dollars of asset purchases.

The stimulus has made a positive impact. The Conference Board Consumer Confidence Index increased to 98.1 in June, up from 85.9 May.

The US dollar has reversed recent gains on the positive news this morning with its dropping against the Canadian dollar, Great British pound and the euro.

Key Movers

Haven currencies were the days big losers as the JPY and CHF both retreated amid an equity led risk on move. While price action across currency markets was largely muted throughout trade on Monday the rebound in the S&P 500 did prompt a small risk on correction forcing the Yen and Franc near half a percent lower as the promise of sustained Federal Reserve support continues to prop up equity markets.

The Great British pound fell through trade on Monday as concerns regarding Brexit and Britain’s ability to fund planned fiscal infrastructure programs forced the below 1.23 to intraday lows at 1.2252.

Attentions today remain squarely affixed to the evolving fight against COVID-19 as risk continues to drive direction and underlying fundamentals are largely ignored.

Expected Ranges

USD/CAD: 1.36 – 1.369 ▼

GBP/USD: 1.226 – 1.238 ▼

EUR/USD: 1.119 – 1.126 ▼

USD/AUD: 1.447 – 1.462 ▼


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Risk-off mood continues as Aussie moves towards 0.6850

OFX Daily Market News

Posted by OFX

AUD – Australian Dollar

In the absence of any local data on Friday the Australian Dollar traded within a 55-pip range against the Greenback and struggled to make a decisive move in either direction. Having moved higher by 1.5 cents earlier on in the week touching 0.6960 the pair witnessed a sell-off as a resurgence in new coronavirus cases in the US threatened to halt the progress in reopening the US economy. With risk dominating the markets and investor nerves rising, riskier currencies like the Aussie and Kiwi are the first to go, having touched an intra-day high of 0.6895, the pair slipped lower and closed Friday’s session at 0.6861.

Looking at the calendar ahead, it is a pretty quiet week for macro news. Tuesday see’s RBA Deputy Governor Debelle speak may clarify the Bank’s position on AUD after Lowe’s comment this week. Thursday is Trade Balance and Friday sees Retail Sales which are expected to show some improvement. As we move into the last week of the Australian financial year, we would expect to continue to see the Aussie vulnerable with rising COVID-19 cases not only in the US, but parts of Europe and also locally in Australia.

Adopting a technical viewpoint, the Australian Dollar opened at 6860. We see initial support at 0.6810, followed by 0.6775. On the topside, the 70c continues to be a huge resistance barrier with 0.6960 a level to watch in the short-term.

Key Movers

The US Dollar Index which measures the strength of the Greenback against a basket of six major currencies was relatively unchanged on Friday. US Covid cases saw the largest daily rise in six-weeks whilst Florida and Arizona had their largest daily rise of infections. The state of Washington has paused its staged reopening amid concerns. US domestic data added to the downbeat tone, Personal Spending underwhelmed, rebounding by 8.2%, less than the 9.3% jump forecasted. This was still a sharp increase on April’s record -12.6% drop. Meanwhile, US Consumer Confidence also came in under expectations at 78.1 in June, missing forecasts of 79.2. Whilst this is only a slight difference it is seen to be an important one as confident consumers spend money which is essential for the US economy to recover quickly. On the flip side, a nervous consumer is unlikely to spend so freely and will hold back the economic rebound leading to a more drawn-out recovery.

The Cable is lower once again touching 4-weeks lows of 1.2314 on Friday driven by a rally of the US Dollar across the board. The GBP also lower against the EUR, getting close to critical resistance levels of 0.9100 and CHF dropped to its lowest levels since March at 1.1687

Expected Ranges

AUD/USD: 0.6810 – 0.6960 ▼

AUD/EUR: 0.6040 – 0.6180 ▼

GBP/AUD: 1.7780 – 1.8140 ▼

AUD/NZD: 1.0650 – 1.0720 ▲

AUD/CAD: 0.9350 – 0.9420 ▲


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Home buyers drive record setting numbers for May

OFX Daily Market News

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USD – United States Dollar

Pending home sales in the US spiked a record 44% after two months of declines because of the COVID-19 shutdown.

According to the National Association of Realtors (NAR), the Pending Home Sales Index rose 44.3% in May and was the highest month-over-month gain since NAR started tracking pending home sales in 2001.

The index measures the change in the number of homes under contract to be sold but still awaiting the closing transaction. The index is considered a leading indicator of economic health because the sale of a home triggers a wide-reaching ripple effect, like renovations, mortgage services and other transactions.

Key Movers

The pound has started the week on the back foot with GBP/USD falling back towards 1.23 and GBP/EUR dropping under 1.10 for the first time since March. The pound is susceptible to risk off moves and with stock markets falling at the end of last week it’s not surprising the pound has taken a bit of a hit. Also, slowly creeping back into the headlines is Brexit with a large gap existing between the UK and EU over the terms of its future trading arrangement. As long as Coronavirus continues to remain under control in the UK, then Brexit will become more of a driver for the pound as we head deeper into 2020 with only just over six months before we are set to leave the bloc with or without a trade deal done.

Equity markets took a hit of late over concerns of the rising number of cases of COVID-19 in the US. The Dow Jones Index dropped over 2500 points through June as investors shifted into more traditional haven assets such as gold and the yen. The euro has held up relatively well, enjoying a semi-haven status with EUR/USD keeping above 1.12 and pushing higher against the GBP too.

Expected Ranges

USD/CAD: 1.365 – 1.370 ▲

GBP/USD: 1.225 – 1.238 ▲

EUR/USD: 1.121 – 1.128 ▼

USD/AUD: 1.452 – 1.461 ▲


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COVID-19 spread weighing on hopes for swift recovery

OFX Daily Market News

Posted by OFX

AUD – Australian Dollar

The Australian dollar crept marginally higher through choppy trade on Thursday as investor attentions remain squarely affixed to the largely unchecked spread of COVID-19 throughout the US, Latin America and South Africa. Having touched intraday lows at 0.6851 the AUD edged upward to mark session highs at 0.6890, but struggled to break outside the 40 point range despite a number of short run upward rallies. Markets appeared reluctant to extend gains across commodity currencies and risk assets, leaving equities, the AUD, NZD and CAD mostly flat on the day.

The re-emergence and rapid spread of new Coronavirus cases across the US has spooked investors, dampening expectations for a swift rebound in economic activity. With the US recovery interrupted, investors are coming to terms with the realities of the current environment and a long/protracted rebuild. The risk on/risk off battle of the past fortnight is starting to tip toward a broader risk-off move with haven assets finding increased support. Equities lost 1.5% through early trade before regulatory change in the US meant a freeing of capital for US banks, prompting a jump in financial stocks that propped up the S&P 500.

As sentiment plays an increasingly important roll in short-term direction our focus remains with broader equity performance as a marker of investors’ appetite for risk. A deeper risk-off move will likely put pressure on short-term supports at 0.6830/40 and could see the AUD retreat back toward 0.67 and possibly 0.66.

Key Movers

The US dollar crept higher through trade on Thursday when measured against a basket of major counterparts, up two tenths of a percent and closing in on four week highs as concerns surrounding a coronavirus resurgence pushes investors toward haven assets. The rapid spread of new infections across a swathe of US states, with Texas and North Carolina forced to suspend plans to re-open their economies and instead impose new measures to try and control their respective outbreaks, has prompted investors to begin re-assessing expectations for a prompt rebound in economic activity. Even if other State and Federal officials continue with the wider economic opening, activity through the short-term is likely to be muted and the recovery process slowed. This fact is beginning to weigh on investors and we are seeing the beginnings of a shift in broader sentiment. A sustained risk-off shift will likely see the USD find renewed short-term demand as markets unwind risk plays.

The GBP is lower this morning after the UK’s Chief Brexit negotiator refused to agree to a compromise on tariffs. While the focus remains largely with the battle against the coronavirus, there is still a long way to go before the UK leaves the EU at the end of the year and further delays/setbacks in divorce negotiations are adding further downward pressure on the GBP. Having slipped below 1.24, the GBP appears well supported on moves approaching 1.2350 for now, but a sell off in risk could prompt a move back toward 1.22 and 1.20.

Expected Ranges

AUD/USD: 0.6830 – 0.6960 ▲

AUD/EUR: 0.6030 – 0.6180 ▲

GBP/AUD: 1.7920 – 1.8180 ▼

AUD/NZD: 1.0650 – 1.0720 ▲

AUD/CAD: 0.9350 – 0.9420 ▲


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