The USD is trading softer against its G10 counterparts

OFX Daily Market News

Posted by OFX

  United States Dollar

The USD is trading softer against its G10 counterparts today on light volume trading. Reports over the weekend indicating that President Trump has instructed his administration to proceed with an additional USD 200bn in tariffs on Chinese good is keeping the USD under pressure. On the data front, US Empire State Manufacturing Index came in under forecast at 19 which is down from the previous figure of 25.6.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.3009-1.3049

The CAD is trading higher against the USD this morning on broader USD weakness. US/China trade policy along with NAFTA continues to elevate market risk for the Loonie. Domestic risk this week will be Tuesday’s manufacturing sales data and Friday’s retail sales & CPI data release.

 

 

 

  Euro

EUR / USD Expected Range: 1.1618-1.1694

The ECB recently reaffirmed their plans to reduce its asset purchase programme to €15 billion per month in the last quarter of the year, finalising the unprecedented programme by the end of the year. There was good news out of Italy this morning as a report apparently from Italian Finance minister Giovanni Tria that the budget deficit from the upcoming budget will be around 1.6%, below the ECB’s ceiling of 2%. This has seen a mini rally in Italian bonds and it may seem that for the time being at least the risks out of Italy are off the table.

In terms of economic fundamentals, Eurozone CPI on headline and core released as expected at 1.0% and 2.0% respectively. Wednesday marks the start of meetings amongst EU leaders and Brexit is set to be one of the topics of conversation with Michel Barnier expected to be granted more flexibility.

 

 

 

  British Pound

GBP / USD Expected Range: 1.3058-1.3152

The party conference season has kicked off with the Liberal Democrats and Vince Cable getting things rolling. This is the first conference of many with both the Tory Party and Labour Party expected to create headlines and fireworks. Normally conference season passes without too much attention, however with the Conservative government having a minority within Parliament and Brexit plans being examined constantly this season could cause some volatility for the pound. Not wishing to miss out on all this upcoming drama, London Mayor Sadiq Khan called for a second referendum over the weekend on the outcome of the Brexit deal. Expect more of this over the coming weeks as well Boris Johnson’s possible leadership bid.

In the meantime UK inflation is released this week which could cement the Bank of England’s position on interest rate hikes. For a next hike in 2019 inflation will have to consolidate around the 2% mark, the Bank of England’s target, if wage growth is still subdued.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7142-0.7194

The Australian Dollar found its feet on Friday, forcing its way above 0.72. The Pair built on the momentum from Thursday to recover from a 30-month low but petered out towards the 0.7230 level. Sentiment ultimately shifted however after US President Trump put the brakes on market optimism, stating that he was indeed willing to put into effect another round of Tariffs despite Secretary Mnuchins’ re-opening of trade talks. Opening this morning at 0.7151, the Aussie continues to feel the effect of the US-China trade tensions.

Exacerbating the trade tensions was several media reports that Trump intended to proceed with $200bn tariffs on Chinese imports. Trump mentioned he was unconcerned with the re-opening of discussions and would indeed press ahead with the tariffs. Over the weekend, the Wall Street Journal also mentioned that Trump may lower the tariff to 10% from the originally proposed 25%, a potentially “better” outcome than expected for the Aussie.

Amidst the trade war discussions was a strengthening Greenback with mostly positive data releases for the week. Chicago Fed President Evans, noted that the US economy was “firing all cylinders” and said it would be “quite normal and consistent” should the Fed take its cash rate above neutral over the medium term. In Australia, things appeared to be quite rosy as well, with 44,000 jobs added to the economy, as reported on Thursday. The initial jump led to movement around the 0.72 level but the good news story was gradually unwound as Chinese data came in a mixed bag. Chinese retail sales remain strong but fixed asset investment continued to decline, undermining the Aussie’s gains.

To start the week the Australian Dollar maintains its focus on the on-going trade war. Domestically, the AUD looks to the RBA’s monetary policy minutes for direction.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6539-0.6589

The New Zealand Dollar is weaker against the U.S. Dollar on the back of upbeat US Data, U.S. domestic retail sales rose 0.1 percent in August, and amid Trade War concerns. Locally on Friday we saw the release of Business NZ Performance of Manufacturing Index (PMI). The seasonally adjusted PMI for August was 52.0. While this was 0.8 points higher than July, it remains below the long run average expansion level of 53.4.

On the data front and the macroeconomic calendar is pretty quiet for the first half of this week. On Wednesday we will see the release of Global Dairy Trade (GDT) which is a leading indicator of the nation’s trade balance. Also, on Wednesday we will see the release of Westpac Consumer Sentiment a survey of about 1,500 consumers which asks respondents to rate the relative level of past and future economic conditions. Looking further ahead in the week we will see on Thursday the release of quarterly Gross Domestic Product and Visitor Arrivals will be released on Friday.

From a technical perspective, the NZD/USD pair is currently trading at 0.6548. We continue to expect support to hold on moves approaching 0.6501 while now any upward push will likely meet resistance around 0.6642.

 

 

 

Posted by OFX

US PPI and CPI both miss the mark, UK GDP accelerates

OFX Daily Market News

Posted by OFX

  United States Dollar

The US Dollar Index (DXY) appreciated 0.33% to start the new working week, the catalyst for the move upwards was stronger than expected US wage growth as well as fresh new threats from President Trump on Chinese imports. Market sentiment decidedly shifted towards safe-haven currencies which saw the Greenback strengthen further than it already has this year.

The US Non-Farm Payroll report released on the previous Friday surprised markets adding 201,000 new jobs in August, beating expectations of 191,000. Also, average hourly earnings rose 0.4% month-on-month and by 2.9% year-on-year, which was the highest wage growth print in almost a decade supporting the Fed’s assertion that the tight labor market would lead to higher wages and price inflation. The implications were not lost on the market which saw US treasury yields move sharply higher as well as boosting expectations of the Fed tightening monetary policy further. The Dollar also benefited from the sentiment, rising higher on the news against most of its counterparts.

New threats from the President also boosted demand for the Greenback despite not announcing the $200bn tariffs on Chinese imports. President Trump did say that it could happen “very soon” but so far, the duties have not yet been implemented. It was another ratchet up of the rhetoric that saw the USD appreciate further with his statement suggesting he was considering putting higher tariffs on all Chinese goods, leading to negative sentiment on market movements. The news hit riskier assets the most and saw steep depreciation for many China aligned currencies.

On the data front, some disappointing data releases put downward pressure on the USD, with PPI and CPI both missing the mark. CPI data came in at 0.2%, missing expectations of 0.3% and unemployment claims also printed at 204K versus expectations of 210K. The US Dollar Index (DXY) dropped touching the 94.43 mark. Core retail sales also printed worse than expected at 0.3%; the forecast was for 0.5%. The only positive side on the economic calendar was from UoM Consumer Sentiment which printed better than expected at 100.8 versus forecast of 96.7.

 

 

 

  Canadian Dollar

The Canadian Dollar started the week softer after employment data fell short of broader expectations. Surprisingly the economy lost more than 50,000 jobs throughout August, the most significant monthly decline since January and well outside analyst expectations for labor market expansion, while an uptick in Full-time employment helped pacify investors and ensures another rate hike is still on the table.

The Canadian dollar still remains vulnerable to trade talk and risk appetite trends. Verification President Trump and the US will look to impose a further $267 billion tariffs on Chinese Imports only escalates recent uncertainty following the break down in trade talks at the end of last week. There is an increasing fear Trump and the US will look to implement Tariffs on Canadian auto-makers, a move that could have significant consequences for the broader Canadian economy.

Elsewhere, oil prices are also putting pressure on the CAD , as the IEA reported global oil supplies hitting a record 100million bpd for the month of August.

 

 

 

  Euro

The euro edged higher through trade on Monday, creeping back through 1.16 to touch intraday highs at 1.1612. The market found confidence in reports that negotiations were moving forward, with Trump and the US Trade Representative Office seeking to commence congressional consultations in a bid to fast track preliminary deals, ahead of a November follow up.

While there are broader concerns Trump could renege on promises to waylay tariffs on EU automakers, a promise from EU negotiators to import more LNG and soybeans seems to have placated the President for the time being and a move to securing longer-term outcomes appears plausible moving into the end of the year.

To close out the week, the EUR/USD saw fresh two-week highs as the pair touched 1.17 in early North American trading before fading. The ECB failed to surprise markets by deciding to keep interest rates on hold, with ECB President Mario Draghi reiterating that underlying economic strength in the Eurozone was supportive of the bank’s confidence in the inflation rate returning to their target level in the near term. In outlining that the bank would remain accommodative with its monetary policy stance, Draghi didn’t adopt a hawkish tone as some were expecting, however the EUR still rallied against the USD throughout the press conference as the greenback suffered selling pressures on the back of the weak CPI read.

 

 

 

  British Pound

The pound began last week on a positive note, rising against the dollar on Monday after the European Union’s top negotiator Michel Barnier said an agreement for Britain to leave the economic bloc might be reached in the coming weeks. Following the news the GBP/USD pair jumped above the 1.3000 level mid-European, reaching a 5-week high of 1.3051.

On the local data front, Gross Domestic Product (GDP) accelerated in the month of July, courtesy of a sharp rise in motor trading, lifting output to its quickest pace in nearly a year. GDP expanded by 0.3% in the month, above the MNI median forecast of a 0.2% rise, this following a 0.1% rise in June. That took growth in the three months to July to 0.6%. Industrial Production also rose by less-than-expected in July, up by just 0.1% mom, while manufacturing output contracted 0.2%.

Closing out the week, the pound peaked to its highest level in six weeks against the greenback. The GBP/USD pair reached a high of 1.3121 on the back of U.S. dollar weakness and the Bank of England keeping interest rates on hold at 0.75%, highlighted greater financial market concerns about Brexit, a month after raising borrowing costs for only the second time in more than a decade.

 

 

 

  Australian Dollar

The Australian Dollar saw limited movements to start last week, holding steady at support levels of 71 US Cents. The opening sessions saw the AUD/USD treading water on renewed trade concerns between the United States and China, and was reasonably muted as traders ignored the release of China’s CPI print for the month of August which came in unexpectantly higher at an annualised rate of 2.3%.

Elsewhere on the data front, last week saw the Westpac Consumer Sentiment report print at a disappointing -3% result, highlighting the falling confidence in market conditions that is reverberating around the globe. On the flip side of the coin, the Aussie found its feet on with a positive jobs report. The highlight of the report was the Australian economy adding 44,000 jobs against an expected 18,000. The Australian Dollar jumped significantly on the news to test the key 0.72 level but failed to break through. Ultimately however, it did spur on a positive advance for the Aussie and helped it holds its gains.

 

 

 

  New Zealand Dollar

In what is a quiet week on the domestic data front for the Kiwi, the domestic unit continued to take its cues from offshore datasets and developments in global risk sentiment.

The Kiwi seemingly suffered at the hands of the greenback for most of the week, as strong second tier data out of the US saw yields tick up and equities rise. Widening interest rate differentials and the threat of potential escalations in the Trump-China trade war will continue to weigh on the NZD in the near term.

 

 

 

Posted by OFX

Aussie tests 0.72 level after adding 44000 jobs to the economy

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar recovered significantly throughout Thursday as the employment report smashed expectations. Opening this morning at 0.7194, the Aussie also found support from US Dollar weakness and another attempt by US Treasury Secretary Mnuchin at reconciliation with China.

Kicking off at home, the Aussie found its feet on Thursday with a positive jobs report. The highlight of the report was the Australian economy adding 44,000 jobs against an expected 18,000. The Australian Dollar jumped significantly on the news to test the key 0.72 level but failed to break through. Ultimately however, it did spur on a positive advance for the Aussie and helped it holds its gains for the day.

The shift in sentiment was also assisted by off-shore forces with the USD weakening slightly after a poor CPI result. The broader interest rate narrative was still very positive however due to a good jobs report earlier in the week, nevertheless the small decline in the CPI reading did weaken the Greenback. The USD also gave ground earlier in the day after US Treasury Steve Mnuchin, a moderate voice within the Whitehouse, reached out to China to continue the trade dialogue. The glimmer of hope of a reconciliation also supported the Aussie well into Thursday.

Moving into the end of the week, the Australian Dollar enjoys a quiet economic calendar with the focus squarely on off-shore events to drive direction.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0875 – 1.0975

The NZD opens 0.2% higher against the USD overnight as weaker than expected inflation numbers out of the worlds largest economy forced the USD lower. The NZD/USD pair did rise as high as 0.6590 after the release however further twitter commentary from President trump regarding the Chinese trade situation hurt both the AUD and NZD units.

We also had NZ food price data for august yesterday which came in slightly lower than expectation. A key input for Q3 CPI, traders will be looking towards todays PMI release as further evidence that the domestic economy is cooling. The NZD/AUD cross was volatile yesterday as a strong labour market report pushed the pair lower to 0.9107 before trump’s china tweets bailed out the NZD, seeing it rise to 0.9135.

On the technical front, we now see NZD/USD first supports at 0.6560 with topside resistance visible at levels nearer to 0.6700.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7830 – 1.8230

The Great British Pound rose to its highest level in six weeks against the greenback last night. The GBP/USD pair reached a high of 1.3121 on the back of U.S. dollar weakness. In the UK yesterday the Bank of England kept interest rates on hold at 0.75% on Thursday and highlighted greater financial market concerns about Brexit, a month after raising borrowing costs for only the second time in more than a decade.

Looking ahead today and the macroeconomic calendar is empty with no scheduled releases. Bank of England’s Governor Carney is due to speak at the Whitaker Lecture in Dublin to discuss Monetary Policy.

From a technical perspective, the GBP/USD pair is currently trading at 1.3108. We continue to expect support to hold on moves approaching 1.3080 while now any upward push will likely meet resistance around 1.3130.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7030 – 0.7280

The United States Dollar Index (DXY) shed another 0.28% in overnight trading to open this morning at 94.54. The Greenback lost a little ground after the CPI reading came in below expectations and also weakened after news of a trade dialogue between US Treasury Secretary Mnuchin and China.

Markets continued to trade in a relatively tight range throughout the day as the trade war between the US and China continued its dampening effect on sentiment. There wasn’t too much news on that front overnight but there was month-on-month core CPI and CPI reports to digest. Disappointingly for the USD, the numbers came in slightly lower than expected, leading to a broad selloff in the Greenback. Markets however, quickly corrected after the initial news to trade just below where it was before the CPI report.

The Federal Reserve’s Bostic also added to the interest rate conversation overnight saying that the FOMC will wait and see the data before adding a fourth rate hike this year. The comments were interpreted as mostly neutral and had little effect on the exchange rate.

Moving into the end of the week, the Greenback turns to its month-on-month retail figures for direction while also keeping an eye on any new trade headlines.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6110 – 0.6220

Thursday saw EUR/USD advance to fresh two-week highs as the pair touched 1.17 in early North American trading before fading into this morning Sydney open where we open at 1.6923. The ECB failed to surprise markets by deciding to keep interest rates on hold with ECB president Mario Draghi reiterating that underlying economic strength in the eurozone was supportive of the banks confidence in the inflation rate returning to their target level in the near term.

In outlining that the bank would remain accommodative with its monetary policy stance, Draghi didn’t adopt a hawkish tone as some were expecting however the EUR still rallied against the USD throughout the press conference as the greenback suffered selling pressures on the back of the weak CPI read.

New technical levels to watch are 1.1700 on the upside with new downside supports at levels nearer to 1.1635 and 1.1570 respectively.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9300 – 0.9400

The Canadian dollar firmed to a two-week high against its U.S. counterpart on Thursday reaching an overnight high of 1.3025 on the back of weaker-than-expected U.S. inflation data weighed on the greenback, offsetting a pullback in crude oil prices. US Inflation data came in below expectations for the second day in a row up 0.2% in August, below the 0.3% of market consensus and the annual rate eased from 2.9% to 2.7%. The loonie has been boosted this week by optimism that a deal to renew the North American Free Trade Agreement would be reached and a jump in the price of oil, one of Canada’s major exports.

Looking ahead today and the macroeconomic calendar is empty with no scheduled releases.

From a technical perspective, the USD/CAD pair is currently trading at 1.2999. We continue to expect support to hold on moves approaching 1.2980 while now any upward push will likely meet resistance around 1.3025.

 

 

 

Posted by OFX

USD finding support despite missing expectations

OFX Daily Market News

Posted by OFX

  United States Dollar

The Greenback has been under pressure this week against its G10 peers with PPI and CPI both missing the mark. The weak prints continue this morning as we have core retail sales releasing worse than expected at 0.3% when forecast was for 0.5%. The only positive side on the economic calendar is from UoM Consumer Sentiment which printed better than expected at 100.8 versus forecast of 96.7. The US Dollar Index has found support levels at 94.50.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.2983 – 1.3043

The Loonie is having a tough time breaking through the 0.77 resistance level against the greenback with the lack of development in the ongoing NAFTA negotiations. Besides NAFTA news, market participants may have found PwC’s Wednesday report insightful, which showed that US tax reforms could put 635,000 Canadian jobs at risk which equate to $85 billion of Canadian GDP. Oil prices are also putting pressure on the CAD today, as the IEA reported global oil supplies hitting a record 100million bpd for the month of August. Despite the lower CAD today, it seems to remain higher overall this week.

 

 

 

  Euro

EUR / USD Expected Range: 1.1656 – 1.1722

The EUR is getting some support today after a more hawkish tone from the ECB President Draghi’s press conference yesterday. President Draghi stated that he is confident that core inflation will rise higher. Data from the Eurozone today was also supportive with a pick-up in wage growth as labour cost raised at the fastest pace since 2012.

 

 

 

  British Pound

GBP / USD Expected Range: 1.3080 – 1.3143

Bank of England Governor Carney continues to warn that a weaker pound and higher inflation would mean higher interest rates, if a no-deal Brexit occurs according to Scotiabank. The good news is that it seems like a deal may come through in the next couple of weeks. Today Carney spoke in Dublin and shared his view on job risk due to technological changes. He believes that the estimate of job losses are too extreme.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7169 – 0.7216

The Aussie found its feet on Thursday following a positive jobs report. The highlight of the report was the Australian economy adding 44,000 jobs against an expected 18,000. The Australian dollar jumped significantly on the news to test the key 0.72 level but failed to break through.

The shift in sentiment was also assisted by off-shore forces, as the USD weakened following a poor CPI result.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6558 – 0.6596

The NZD opens higher against the USD as weaker than expected inflation numbers from the World’s largest economy forced the USD lower. The NZD/USD pair did rise as high as 0.6590 after the release, however further twitter commentary from President Trump regarding the Chinese trade situation hurt both the AUD and NZD units.

 

 

 

Posted by OFX

Aussie jumps on news of another round of US-China trade discussions

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar traded within a tight range for much of Wednesday with little to drive direction on the economic calendar. Wednesday mostly continued the running narrative of the week with trade-concerns continuing to dominate market sentiment. However, sentiment quickly shifted later in the day on reports that US Treasury Secretary Steve Mnuchin has invited China to attend trade talks. Opening this morning at 0.7173 the Aussie moves into Thursday looking its’ healthiest all week.

In what proved to be a watchful day for the Aussie, there was some news that truncated the day. The Westpac Consumer Sentiment report was released early in the Asian session with a disappointing -3% result, highlighting the falling confidence in market conditions that is reverberating around the globe. The uncertainty from the US-China trade dispute continues to put a dampening effect on most currency markets. There was however some hope of reconciliation in the market with reports that the US Treasury Secretary, Steve Mnuchin is willing to reopen trade discussions. While expectations of a breakthrough are limited, considering the numerous talks previously, the Aussie immediately jumped on the news, rising an impressive 40 points to trade at this mornings’ open.

The Aussie now turns its attention to employment figures slated for release this morning and CPI numbers due for release later in the day. The focus will also remain fixed on the headlines.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0780 – 1.0980

The NZD benefitted from USD weakness overnight as the USD fell sharply during the US session as positive news on the trade front filtered through to markets. NZD/USD jumped from 0.6503 in early London trade to touch highs of 0.6566 representing a near 0.5% advance on the day. The article from the WSJ reported US treasury officials had invited Chinese officials to meet in the coming weeks for trade talks with the news pushing the CNH 0.7% higher on the day and taking the AUD and NZD along for the ride. AUD/NZD also rose from 1.0900 to 1.0944.

A quiet day on the data front for the NZD with only second tier data due. We have REINZ house prices and Aug food prices out with the REINZ of particular interest as the Reserve bank will be watching it closely for further signs of cooling in the domestic economy. 11:30am Sydney time we have the Australian August jobs report due out; historically a volatile release, any surprises could see NZD relevant reactions especially in the AUD/NZD cross.

On the technical front, NZD/USD is still well supported at the 0.6500 handle with any topside moves expected first resistance at 0.6566 (overnight high) before 0.6585.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7830 – 1.8230

The Great British Pound edged higher on Wednesday against the U.S. Dollar as a rise in optimism over prospects for a Brexit trade deal with the European Union. The Pound Sterling hit an overnight high of 1.3079. European Commission head Jean-Claude Juncker on Wednesday also renewed a pledge of close trade and security ties with Britain post-Brexit, helping lift sentiment.

Looking ahead today the Bank of England meets for its monetary policy meeting, at which it is expected to keep rates on hold at 0.75%.

From a technical perspective, the USD/GBP pair is currently trading at 1.3047. We continue to expect support to hold on moves approaching 1.3020 while now any upward push will likely meet resistance around 1.3095.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7030 – 0.7280

The United States Dollar Index (DXY) moved marginally lower against a basket of currencies after another, mostly benign day on the economic calendar. There was however quite a few headlines to contend with which drove market sentiment throughout the day. The DXY opens this morning at 94.81, a 0.4% loss on the previous day after trade discussions appear to be back on the table.

Again, uncertainty dominated market sentiment for most of the day with trade concerns continuing to be the primary driver in currency markets. The implications of a protracted trade dispute have begun to permeate within the media with companies like Ford and Apple outlining how the trade tensions would affect their business’. Ultimately the stark reality of what President Trumps trade policy shift could look like has rattled markets as a reconciliation looks far away. It also wasn’t helped with the Presidents recent escalation of the trade conflict, threatening a further $267bn worth of tariffs. The market did, however have a glimmer of hope with US Treasury Secretary Steve Mnuchin inviting China to re-open trade talks. Mnuchin, known as a moderate within the Whitehouse, isn’t expected to have any major breakthroughs as previous discussions have proved ineffective. Nevertheless, the news bolstered emerging markets and commodity currencies.

Fed Governor Brainard, a key member of the FOMC also spoke overnight. Interestingly, she echoed comments from other members of the FOMC that monetary policy may need to move faster and into restrictive territory. She warned of imbalances in the yield curve but ultimately the market interpreted her speech to suggest the Fed intends to tighten more than the market currently prices.

Closing out an action-packed day was a small decline in US Producer Prices with their first drop in 1.5 years to -0.1%. Led by declines in food prices and a range of trade services, the Greenback weakened slightly on the news.

Moving into Thursday, attentions remain affixed to the headlines and the CPI report due later in the day.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6110 – 0.6220

Despite weaker-than-expected Eurozone Industrial Production the Euro advanced against the U.S Dollar moving from intraday lows of 1.1570 to highs of 1.1649. The data showed fresh evidence of weakness within the Eurozone economy the -0.8% contraction in production on the month could have put significant pressure on the Euro. Alas, the pair is being supported in a risk-on environment and is currently trading at 1.1627 at the time of writing.

Looking ahead there is a slew of economic data today, German Final CPI – the preliminary estimate for August stood at a monthly increase of 0.1%. The final measure will likely confirm it. Any change in the German number will impact the all-European final figure due int he following week. French Final CPI – the second-largest economy in Europe saw an increase of 0.5% m/m in August according to the initial read. Also here, it will likely be confirmed. The closely watched Euro-zone rate decision. The European Central Bank reduces its bond-buying scheme at the end of the month to €15 billion from €30 billion so far. It intends to end purchases at the end of the year. Draghi and co. are unlikely to make any announcements. However, the recent drop in inflation and trade concerns may push them to paint a more dovish picture. In addition to the tone of the presser, the ECB releases new staff forecasts in this meeting. Any upgrade or downgrade of inflation and growth forecasts may be indicative of the next moves by the central bank. No big changes are on the cards. If Draghi says that downside risks have increased, it could be more meaningful.

On the technical side first line of support sits at 1.1600 followed by 1.1572. On the upside, we see resistance at 1.1630 and 1.1654.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9330 – 0.9530

The Canadian Dollar fell against a basket of other currencies on Wednesday. The USD/CAD pair fell a 24-hour low of 1.2980 the lowest level since August 31. The loonie is being supported by higher crude oil prices, NAFTA expectations and today, particularly by a weaker US dollar.

On the local data front today we will see the only release New Housing Price Index (NHPI) for the month of August. New home prices are expected to increase again in August by 0.1%.

From a technical perspective, the USD/CAD pair is currently trading at 1.2996. We continue to expect support to hold on moves approaching 1.2980 while now any upward push will likely meet resistance around 1.3020.

 

 

 

Posted by OFX

Optimism in US-China trade talks

OFX Daily Market News

Posted by OFX

  United States Dollar

CPI data released at 0.2%, which missed expectations of 0.3% this morning. Unemployment claims printed at 204K versus expectations of 210K. The US Dollar Index (DXY) dropped touching the 94.43 mark. No hard headlines regarding trade today, but it seems like China is open and willing to defuse any trade tensions with the US despite Trump’s harsh tariff threats on $200B of Chinese imports. The USD is currently trading 0.5% lower across most of its G10 peers. Tomorrow we will have m/m Retail Sales at 8:30AM EST.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.2976 – 1.3019

The Loonie extended its gains yesterday on the back of missed expectations from US m/m PPI figures, and WTI futures over $71. No major developments out of yesterday’s NAFTA meeting, which left the CAD trading based on economic data figures and oil prices.
The next major event risk for the Loonie will come next Friday 8:30am EST when CPI and Core Retail Sales release.

 

 

 

  Euro

EUR / USD Expected Range: 1.1609 – 1.1701

The EUR is trading higher this morning in the North American trading session. The ECB held interest rate and QE unchanged as widely expected. The Governing Council expects the ECB to hold interest rate unchanged at least through the summer of 2019. EUR/USD gets a further boost higher after US core inflation also missed target this morning.

 

 

 

  British Pound

GBP / USD Expected Range: 1.3026-1.3124

The Sterling is on firmer ground after Bank of England voted to leave rates unchanged at 0.75% as expected. A unanimous vote of 9-0 in favor of no change highlights the financial market uncertainty regarding Brexit. Economists polled by Reuters are expecting no change in interest rates until after the departure of Britain in the EU. Governor Carney will be speaking tomorrow morning in Dublin.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7168 – 0.7229

The Australian dollar traded within a tight range for much of Wednesday’s Asian session, with little to drive direction on the economic calendar. However, sentiment quickly shifted later in the day on reports that US Treasury Secretary Steve Mnuchin has invited China to attend trade talks.

Australian employment data, released overnight, also printed better than expected. Headline employment change printed better than expected at +44k vs. and expected +18.0. Unemployment came in at 5.3%m as forecasted.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6543 – 0.6590

The NZD benefitted from USD weakness overnight as the USD fell sharply during the US session as positive news on the trade front filtered through to markets. NZD/USD jumped from 0.6503 in early London trade to touch highs of 0.6566 representing a near 0.5% advance on the day.

For the remainder of the week, we have NZ Manufacturing Index numbers, to be released overnight. Next week we have quarterly NZ GDP numbers.

 

 

 

Posted by OFX

Risk Appetite in Energy and Commodities Moves the Dollar Index Lower

OFX Daily Market News

Posted by OFX

  United States Dollar

The US Dollar marginally retreated in overnight trading, slowly unwinding from its position of strength for much of the week. The US Dollar Index fell 0.04% against a basket of currencies as risk appetite slightly returned to the market.

It was a mostly quiet day in FX markets as no new news on the trade dispute came to light. The market mostly gyrated within a tight range as the pall of Trump’s trade tariffs weighed on market sentiment. Uncertainty about what’s next in the China-US trade dispute, as well as its implications on global growth also left the majors trading within familiar levels. Nevertheless, there were some small movements as marginal improvements in risk appetite led to a modest appreciation in some risk-aligned currencies.

The Greenback sees little support from PPI data released this morning with both monthly and annualized missing expectations figures showed -0.1% and 2.8% respectively. PPI monthly and annualized excluding the more volatile items of food and energy also missed.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.3042 – 1.3079

The Canadian Dollar extended its recovery through trade on Tuesday pushing comfortably beyond 0.76 and 0.7650. An uptick in oil prices fueled by US sanctions and Iranian exports coupled with a slowdown in US crude production for 2019 helped drive the oil led unit higher.

Having touched intraday highs at 0.7665, the loonie found renewed support amid NAFTA optimism as talks between US trade delegates and Canadian Foreign Minister Chrystia Freeland were reportedly “constructive and productive.”

Capacity Utilization for the second quarter did little to support the loonie further as expectations were for 86.9% and the data printed at 85.5%. The loonie will continue to find direction in ongoing trade developments. NAFTA remains crucial for the broader CAD outlook with approximately 75% of Canadian exports bound for the States. A failure in trilateral and bilateral trade talks could significantly damage the medium and long-term economic outlook.

 

 

 

  Euro

EUR / USD Expected Range: 1.1570 – 1.1607

EUR/USD bounced around the 1.16 levels again overnight and despite optimistic Eurozone data the common currency failed to hold above resistance levels. The monthly German ZEW Economic Sentiment showed a rise to a negative 10.6 this month from minus 13.7 in August. This was compared to the consensus forecast for a reading of minus 14.0. Meanwhile, for the Eurozone, the sentiment index increased to minus 7.2 in September from minus 11.1 a month earlier. Markets expected the index to improve to just minus 10.9.

EU Industrial Production for the whole euro-zone was published after the both monthly and annualized miss consensus sand previous.

On the technical side of things, there is a support line forming around 1.1565 followed by 1.1525. On the upside, resistance at 1.1625 and 1.1655 which was last week’s high.

 

 

 

  British Pound

GBP / USD Expected Range: 1.2980 – 1.3048

The pound edged lower against the U.S. dollar on Tuesday as optimism for prospects of a Brexit trade deal with the European Union faded, again. This came not too long after GBP/USD hit its highest level since early August. With less than seven months to go before Britain is due to leave the European Union, markets should be prepared for even more volatility ahead.

On the local data front yesterday, we saw the release of UK Jobless Rate which remained at 4%, the lowest since the winter of 1974-75. Unemployment continued to fall with 55K fewer people out of work in the three months to July. UK wage growth was also better than expected, rising by 2.9% in the three months to July. Today the macroeconomic calendar is empty with no scheduled releases. Traders will likely have half an eye on tomorrow’s Bank of England statement.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7094 – 0.7129

The Australian Dollar continued its bearish trend to break US 71 cents for the first time since February 2016 as traders continue to sell off the local currency. Opening the morning at 0.7125, the Aussie moved initially lower to 0.7095 following the release of NAB Business confidence which dropped to two-year lows.

The central theme is a gloomy outlook by Australian companies & uncertainty over political leadership changes in August despite an overall positivity on many key indicators.

Gains were seen into the close of the domestic trade with an intraday high of 0.7125 before falling overnight to new lows of 0.7085. Oscillating in a forty-point range for the day, the AUD/USD eventually settled higher as a bout of increased risk appetite on no further tariff news.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6503 – 0.6530

One of the worst G10 performers on the day, the NZD remained under pressure on Tuesday as it continued its downward trend; depreciating 0.3% against the world’s base currency and 0.2% against its rival across the pond. NZD/USD fell from 0.6540 to 0.6501 which represents a 2 and a half year low against the greenback and faired marginally better against the Aussie as the AUD/NZD cross ticked up to 1.0914 from 1.0890.

The Kiwi seemingly suffered at the hands of the greenback as strong second tier data out of the US saw yields tick up and equities rise. Widening interest rate differentials and the threat of potential escalations in the Trump-China trade war will continue to weigh on the NZD in the near term.

Downside support remains at the key 0.65 level with any moves through this handle expected to meet further support around the 0.6470. On the flip side, any upside recoveries are likely to meet resistance at 0.6540.

 

 

 

Posted by OFX

Australian Dollar continues its bearish trend

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar continued its bearish trend to break US 71 cents for the first time since February 2016 as traders continue to sell off the local currency. Opening the morning at 0.7110, The Aussie moved initially lower to 0.7095 following the release of NAB Business confidence which dropped to two-year lows.

The main theme being a gloomy outlook by Australian companies & uncertainty over political leadership changes in August despite an overall positivity on the majority of key indicators.

Gains were seen into the close of the domestic trade with an intraday high of 0.7125 before falling overnight to new lows of 0.7085. Oscillating in a forty-point range for the day, the AUD/USD eventually settled higher as a bout of increased risk appetite on no further tariff news.

Looking ahead for the day, Westpac consumer sentiment is released this morning along with the announcement of the rice of goods and services in the United States this evening.

The Australian dollar opens this morning at 0.7115.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0820 – 1.0980

One of the worst G10 performers on the day, the NZD remained under pressure on Tuesday as it continued its downward trend; depreciating 0.3% against the world’s base currency and 0.2% against its rival across the pond. NZD/USD fell from 0.6540 to 0.6501 which represents a 2 and a half year low against the greenback and faired marginally better against the Aussie as the AUD/NZD cross ticked up to 1.0914 from 1.0890.

The Kiwi seemingly suffered at the hands of the greenback as strong second tier data out of the US saw yields tick up and equities rise. Widening interest rate differentials and the threat of potential escalations in the Trump-China trade war will continue to weigh on the NZD in the near term.

Downside support still remains at the key 0.65 level with any moves through this handle expected to meet further support around the 0.6470. On the flip side, any upside recoveries are likely to meet resistance at 0.6540.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.8030 – 1.8530

The Great British Pound edged lower on Tuesday against the U.S. Dollar as a rise in optimism over prospects for a Brexit trade deal with the European Union faded. The Pound Sterling hit its highest level since early August in early trading at 1.3086. With less than seven months to go before Britain is due to leave the European Union markets should be prepared for even more volatility ahead.

On the local data front yesterday we saw the release of UK Jobless Rate which remained at 4.00%, the lowest since the winter of 1974-75. Unemployment continued to fall with 55K fewer people out of work in the three months to July. UK wage growth was also better than expected rising by 2.9% in the three months to July. Today the macroeconomic calendar is empty with no scheduled releases.

From a technical perspective, the USD/GBP pair is currently trading at 1.3019. We continue to expect support to hold on moves approaching 1.2985 while now any upward push will likely meet resistance around 1.3050.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7030 – 0.7230

The US Dollar marginally retreated in overnight trading, slowly unwinding from its position of strength for much of the week. The US Dollar Index fell 0.04% against a basket of currencies as risk appetite slightly returned to the market.

It was a mostly benign day in FX markets as no new news on the trade dispute came to light. The market mostly gyrated within a tight range as the pall of Trumps trade tariffs weighed on market sentiment. Uncertainty about what’s next in the China-US trade dispute, as well as its implications on global growth also left the majors trading within familiar levels. Nevertheless, there was some small movements as marginal improvements in risk appetite led to a small appreciation in some risk-aligned currencies.

Moving into Wednesday, the Greenback turns to the m/m PPI reading for direction with a close eye on the headlines as well.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6080 – 0.6180

The Euro Dollar bounced around the 1.16 levels against the Greenback and despite optimistic Eurozone data the common currency failed to hold above resistance levels. The monthly German ZEW Economic Sentiment showed a rise to a negative 10.6 this month from minus 13.7 in August. This was compared to the consensus forecast for a reading of minus 14.0. Meanwhile for the Eurozone the sentiment increased to minus 7.2 in September from minus 11.1 a month earlier. Consensus expected the index to improve to just minus 10.9. The details of the report show that expectations about the eurozone economy as a whole improved somewhat, whereas the outlook for Italy became gloomier.

Looking ahead todays sees the release of Industrial Production. Industrial output for the whole euro-zone is published after the main countries will have published their own data. Nevertheless, the overall number tends to provide surprises. A drop of 0.7% was seen in June and another slide cannot be ruled out for July.

On the technical side of things, there is a support line forming around 1.1565 followed by 1.1525. On the upside, resistance at 1.1625 and 1.1655 which was last weeks high.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9230 – 0.9380

The Canadian Dollar extended its recovery through trade on Tuesday pushing comfortably beyond 0.76 and 0.7650. An uptick in oil prices fueled by US sanctions and Iranian exports coupled with a slowdown in US crude production for 2019 helped drive the oil led unit higher.

Having touched intraday highs at 0.7665 the Loonie found renewed support amid NAFTA optimism as talks between US trade delegates and Canadian Foreign Minister Chrystia Freeland were reportedly “constructive and productive”.

With little domestic data on hand to drive markets the CAD will continue to find direction in ongoing trade developments. NAFTA remains crucial for the broader CAD outlook with approximately 75% of Canadian exports bound for the States. A failure in trilateral and bilateral trade talks could significantly damage the medium and long term economic outlook.

 

 

 

Posted by OFX

Australian Dollar holds steady at 71 US cents

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar saw limited movements to start the week, holding steady at support levels of 71 US Cents. Opening the morning treading water on renewed trade concerns between the United States and China, the AUD/USD was muted as traders ignored the release of China’s CPI print for the month of August which came in unexpectantly higher at an annualised rate of 2.3%.

The Aussie extended to intraday highs during the European session of 0.7130 with gains eventually paired back to test the 0.71 handle during North American trade as the greenback continued to trade higher off the positive Non-Farm Payroll release on Friday evening.

With the deteriorating Australian dollar continuing to face pressure from news both domestically and abroad, a further test of support at 71 US cents could possibly occur with the release of NAB business confidence levels this morning which has eased in the previous months this year.

The Australian Dollar opens this morning at 0.7110.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0820 – 1.0980

The NZD traded in a narrow range overnight, anchored between 0.6520 and 0.6545 before retracing and consolidating slightly higher than last week’s 30-month lows at 0.6525. The Kiwi also shed 30 pips against its Australian counterpart with the likely catalyst for the movements being a slight elevation in risk appetite given commentary out of Europe.

In what is a quiet week on the domestic data front for the Kiwi, the domestic unit will continue to take its cues from offshore datasets and developments in global risk sentiment. Of particular interest to NZD/USD traders will be CPI and PPI measures out of the world’s largest economy later this week which are set to be followed up by retail sales numbers for august on Friday. With the interest rate differential between the 2 currencies continuing to move in favour of the greenback, any upside surprises in these reads will likely put the Kiwi on the back foot as markets adjust their rate hike expectations.

On the technical front, key psychological support is located at the 0.6500 level with resistance is pegged at levels nearer to 0.6565 and 0.6600 respectively.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.8030 – 1.8530

The Great British rose against the dollar on Monday after the European Union’s top negotiator Michel Barnier said an agreement for Britain to leave the economic bloc might be reached in the coming weeks. Following the news the GBP/USD pair jumped pass 1.3000 level mid-European morning, reaching a 5-week high of 1.3051.

On the local data front yesterday Gross Domestic Product (GDP) accelerated in the month of July, courtesy of a sharp rise in motor trading, lifting output to its quickest pace in nearly a year. GDP expanded by 0.3% in the month of July, above the MNI median forecast of a 0.2% rise, after a 0.1% rise in June. That took growth in the three months to July to 0.6%. Industrial Production also rose by less-than-expected In July, up by just 0.1% MoM, while manufacturing output contracted 0.2%. Looking ahead today we will see the release of UK Jobless Rate which is expected to remain at 4.00%.

From a technical perspective, the USD/GBP pair is currently trading at 1.3024. We continue to expect support to hold on moves approaching 1.2985 while now any upward push will likely meet resistance around 1.3050.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7030 – 0.7230

The US Dollar retreated marginally in overnight trading, losing some ground against most of the currencies as investors digested the news over the weekend. The US Dollar Index (DXY) shed 0.27% on the day to open at 95.15 against a basket of currencies.

With little on the economic calendar to drive markets, the Greenback took stock of current market conditions and traded within a tight range for much of the session. Between a surprisingly strong jobs report and a further escalation in the US-China trade war, the Dollar took the initiative early in the week and extended its gains from Friday only to slowly lose some of that ground throughout the American session. Nevertheless, the USD remains firmly on the front foot, moving into Tuesday.

The catalyst for the DXY retreat came from Europe with the Sterling and Euro both appreciating marginally against the Greenback after EU Chief Negotiator Barnier noted a potential timeline for a Brexit Deal. The Fibre and Pound both shot higher, boosted on the hopes that a Brexit deal could be agreed as early as six to eight weeks from now. Commodity currencies however didn’t fare so well with the CAD, NZD and AUD among the worst performers of the day and with no respite in sight.

Moving into Tuesday, investors again turn to the headlines with only a quiet economic calendar to contend with.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6080 – 0.6180

The Euro edged higher through trade on Monday creeping back through 1.16 to touch intraday highs at 1.1612. With little domestic data on hand to drive direction attentions were focused squarely on resuming US and European trade talks. The market found confidence in reports negotiations were moving forward, with the Trump and the US Trade Representative office seeking to commence Congressional consultations in a bid to fast track preliminary deals ahead of a November follow up.

While there were broader concerns Trump would renege on promises to waylay tariffs on EU automakers a promise from EU negotiators to import more LNG and soybeans seems to have placated the President for the time being and a move to securing longer term outcomes appears plausible moving into he end of the Year.

With little headline data on hand to drive direction through trade on Tuesday our attentions remain with ongoing trade developments ahead of the ECB policy announcement Thursday. With broader USD upside still intact we expect investors will continue to sell into rallies above 1.16/1.1650 while short term support holds firm on moves approaching 1.1350.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9330 – 0.9430

The Canadian dollar edged marginally higher through trade on Monday bouncing off 7-week lows to maintain a narrow band in the absence of headline data events. With little developments in ongoing NAFTA negotiations the Loonie struggled to break outside broader holding patterns, bouncing between 0.7560 and 0.7603. As ongoing discussion appear to have stalled the Loonie has found support in an ongoing Hawkish undertone proffered by the Bank of Canada and an open possibility the monetary policy committee may amend rates again before the end of the year.

Interest Rate upside is the primary prop supporting the CAD at present as broader trade concerns and softening oil prices weigh on the commodity driven unit. NAFTA continues to cast a specter of uncertainty over the short and medium-term outlook with key sticking points yet to be resolved and with talks on hold until after US trade officials return from the EU today we can expect little movement outside current ranges.

Attentions remain with trade with a break below support at 0.7560 opening the door to a deeper downward correction.

 

 

 

Posted by OFX

NAFTA Talk Resume at 11:00 EST

OFX Daily Market News

Posted by OFX

  United States Dollar

The Greenback is mixed and relatively quiet across the board today with no major economic fundamentals to be released. Only the second tier JOLTS Jobs Opening in July released, which printed better than expected at 6939. Wholesale Trade Sales and Inventories also printed, but fell short of expectation at 0.0% and 0.6% respectively. Next major risk event will come on Thursday when CPI will release along with Retail Sales on Friday.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.3132 – 1.3175

The Loonie is firm starting the North American trading session. NAFTA talks are still keeping the market on its toes, as Freeland and Lightizer are scheduled to resume at 11:00 EST. Chapter 19 and diary supply will be some of the topic of discussions along with automobile tariffs. Housing Starts in August printed worse than expected at 201.0K when forecast was for 216.3K. The rest of the week will be quiet on the economic calendar and only the second tier New Housing Price Index is due to release on Thursday.

 

 

 

  Euro

EUR / USD Expected Range: 1.1566-1.1644

The EUR is trading relatively flat today despite positive fundament data from the Eurozone. German ZEW Investor Confidence data came in at -10.6 versus the forecast of -13.5. This is an improvement from the previous figure of -13.7. EUR/USD failed react to the supportive data as it continues to trade within its recent range. Short term risk for the EUR is on the downside with support coming in on the downside around the 1.1510 area.

 

 

 

  British Pound

GBP / USD Expected Range: 1.2965 – 1.3087

The Sterling is softer this morning after coming off yesterday’s highs. Average Weekly Earnings 3m/y released better than expected at 2.6% when expectation was for 2.5%. Unemployment Rate held at 4.0% as expected and Employment Change dipped to 3K from the expected 9K. The softness mainly came after The Treasury announced that BoE Governor Carney will be extending his term to a period beyond his expiration date next year to see how the economy develops throughout Brexit.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7087 – 0.7129

The Australian dollar saw limited movements to start the week, holding steady at support levels of 71 US Cents. Opening the morning treading water on renewed trade concerns between the United States and China, AUD/USD was muted as traders largely ignored the release of China’s CPI print for the month of August, which came in unexpectedly higher at an annualized rate of 2.3%.

The pair tested its lowest level since December of 2016

With the deteriorating Australian dollar continuing to face pressure from news both domestically and abroad, a further test of intermediate support at 0.7045 could possibly occur.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6502 – 0.6541

The NZD traded in a narrow range overnight, anchored between 0.6520 and 0.6545 before retracing and consolidating slightly higher than last week’s 30-month lows at 0.6525.

In what is a quiet week on the domestic data front for the Kiwi, the domestic unit will continue to take its cues from offshore datasets and developments in global risk sentiment. Of particular interest to NZD/USD traders will be CPI and PPI measures out of the world’s largest economy later this week which are set to be followed up by retail sales numbers for august on Friday. With the interest rate differential between the 2 currencies continuing to move in favour of the greenback, any upside surprises in these reads will likely put the Kiwi on the back foot as markets adjust their rate hike expectations.

 

 

 

Posted by OFX